Correlation Between Tacheng Real and Sinopower Semiconductor

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

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

Diversification Opportunities for Tacheng Real and Sinopower Semiconductor

-0.67

Correlation Coefficient

Tacheng Real  Sinopower Semiconductor

Excellent diversification

The 3 months correlation between Tacheng and Sinopower is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tacheng Real Estate and Sinopower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopower Semiconductor and Tacheng Real 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 Tacheng Real Estate 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 Tacheng Real i.e., Tacheng Real and Sinopower Semiconductor go up and down completely randomly.

Pair Corralation between Tacheng Real and Sinopower Semiconductor

Assuming the 90 days trading horizon Tacheng Real Estate is expected to under-perform the Sinopower Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Tacheng Real Estate is 1.51 times less risky than Sinopower Semiconductor. The stock trades about -0.4 of its potential returns per unit of risk. The Sinopower Semiconductor is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  9,590  in Sinopower Semiconductor on October 22, 2024 and sell it today you would lose (560.00) from holding Sinopower Semiconductor or give up 5.84% of portfolio value over 90 days.

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

Tacheng Real Estate  vs.  Sinopower Semiconductor

Tacheng Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tacheng Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tacheng Real 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

0 of 100

Very Weak

Over the last 90 days Sinopower Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Tacheng Real and Sinopower Semiconductor

The main advantage of trading using opposite Tacheng Real and Sinopower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tacheng Real 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 Tacheng Real Estate 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.