Correlation Between Dimension Computer and Elite Semiconductor

Can any of the company-specific risk be diversified away by investing in both Dimension Computer and Elite Semiconductor 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 Dimension Computer and Elite Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimension Computer Technology and Elite Semiconductor Memory, you can compare the effects of market volatilities on Dimension Computer and Elite Semiconductor 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 Dimension Computer with a short position of Elite Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimension Computer and Elite Semiconductor.

Diversification Opportunities for Dimension Computer and Elite Semiconductor

0.52

Correlation Coefficient

Dimension Computer  Elite Semiconductor

Very weak diversification

The 3 months correlation between Dimension and Elite is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dimension Computer Technology and Elite Semiconductor Memory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Semiconductor and Dimension Computer 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 Dimension Computer Technology are associated (or correlated) with Elite Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Semiconductor has no effect on the direction of Dimension Computer i.e., Dimension Computer and Elite Semiconductor go up and down completely randomly.

Pair Corralation between Dimension Computer and Elite Semiconductor

Assuming the 90 days trading horizon Dimension Computer Technology is expected to generate 2.11 times more return on investment than Elite Semiconductor. However, Dimension Computer is 2.11 times more volatile than Elite Semiconductor Memory. It trades about 0.2 of its potential returns per unit of risk. Elite Semiconductor Memory is currently generating about 0.0 per unit of risk. If you would invest  2,420  in Dimension Computer Technology on December 31, 2024 and sell it today you would earn a total of  1,510  from holding Dimension Computer Technology or generate 62.4% return on investment over 90 days.

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

Dimension Computer Technology  vs.  Elite Semiconductor Memory

Dimension Computer

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimension Computer Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Dimension Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Elite Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elite Semiconductor Memory has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Elite Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Dimension Computer and Elite Semiconductor

The main advantage of trading using opposite Dimension Computer and Elite Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimension Computer position performs unexpectedly, Elite Semiconductor 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 Elite Semiconductor will offset losses from the drop in Elite Semiconductor's long position.

The idea behind Dimension Computer Technology and Elite Semiconductor Memory 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.