Correlation Between Cameo Communications and Sinopower Semiconductor

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

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

Diversification Opportunities for Cameo Communications and Sinopower Semiconductor

0.24

Correlation Coefficient

Cameo Communications  Sinopower Semiconductor

Modest diversification

The 3 months correlation between Cameo and Sinopower is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and Sinopower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopower Semiconductor and Cameo Communications 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 Cameo Communications are associated (or correlated) with Sinopower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopower Semiconductor has no effect on the direction of Cameo Communications i.e., Cameo Communications and Sinopower Semiconductor go up and down completely randomly.

Pair Corralation between Cameo Communications and Sinopower Semiconductor

Assuming the 90 days trading horizon Cameo Communications is expected to under-perform the Sinopower Semiconductor. In addition to that, Cameo Communications is 1.41 times more volatile than Sinopower Semiconductor. It trades about 0.0 of its total potential returns per unit of risk. Sinopower Semiconductor is currently generating about 0.15 per unit of volatility. If you would invest  9,430  in Sinopower Semiconductor on December 4, 2024 and sell it today you would earn a total of  1,720  from holding Sinopower Semiconductor or generate 18.24% return on investment over 90 days.

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

Cameo Communications  vs.  Sinopower Semiconductor

Cameo Communications

Risk-Adjusted Performance

Very Weak

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

Sinopower Semiconductor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sinopower Semiconductor are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sinopower Semiconductor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cameo Communications and Sinopower Semiconductor

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

The idea behind Cameo Communications and Sinopower Semiconductor 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.