Correlation Between Shuhua Sports and Semiconductor Manufacturing

Can any of the company-specific risk be diversified away by investing in both Shuhua Sports and Semiconductor Manufacturing at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shuhua Sports and Semiconductor Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shuhua Sports Co and Semiconductor Manufacturing Electronics, you can compare the effects of market volatilities on Shuhua Sports and Semiconductor Manufacturing and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shuhua Sports with a short position of Semiconductor Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shuhua Sports and Semiconductor Manufacturing.

Diversification Opportunities for Shuhua Sports and Semiconductor Manufacturing

-0.06

Correlation Coefficient

Shuhua Sports  Semiconductor Manufacturing

Good diversification

The 3 months correlation between Shuhua and Semiconductor is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shuhua Sports Co and Semiconductor Manufacturing El in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing and Shuhua Sports is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shuhua Sports Co are associated (or correlated) with Semiconductor Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Manufacturing has no effect on the direction of Shuhua Sports i.e., Shuhua Sports and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Shuhua Sports and Semiconductor Manufacturing

Assuming the 90 days trading horizon Shuhua Sports is expected to generate 1.13 times less return on investment than Semiconductor Manufacturing. In addition to that, Shuhua Sports is 2.19 times more volatile than Semiconductor Manufacturing Electronics. It trades about 0.14 of its total potential returns per unit of risk. Semiconductor Manufacturing Electronics is currently generating about 0.35 per unit of volatility. If you would invest  461.00  in Semiconductor Manufacturing Electronics on November 28, 2024 and sell it today you would earn a total of  58.00  from holding Semiconductor Manufacturing Electronics or generate 12.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Shuhua Sports Co  vs.  Semiconductor Manufacturing El

Shuhua Sports

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shuhua Sports Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shuhua Sports may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Semiconductor Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Semiconductor Manufacturing Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Shuhua Sports and Semiconductor Manufacturing

The main advantage of trading using opposite Shuhua Sports and Semiconductor Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shuhua Sports position performs unexpectedly, Semiconductor Manufacturing can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Semiconductor Manufacturing will offset losses from the drop in Semiconductor Manufacturing's long position.

The idea behind Shuhua Sports Co and Semiconductor Manufacturing Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.