Correlation Between Sinopower Semiconductor and Mospec Semiconductor

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

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

Diversification Opportunities for Sinopower Semiconductor and Mospec Semiconductor

-0.66

Correlation Coefficient

Sinopower Semiconductor  Mospec Semiconductor

Excellent diversification

The 3 months correlation between Sinopower and Mospec is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sinopower Semiconductor and Mospec Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mospec Semiconductor Corp and Sinopower Semiconductor 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 Sinopower Semiconductor are associated (or correlated) with Mospec Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mospec Semiconductor Corp has no effect on the direction of Sinopower Semiconductor i.e., Sinopower Semiconductor and Mospec Semiconductor go up and down completely randomly.

Pair Corralation between Sinopower Semiconductor and Mospec Semiconductor

Assuming the 90 days trading horizon Sinopower Semiconductor is expected to generate 1.73 times more return on investment than Mospec Semiconductor. However, Sinopower Semiconductor is 1.73 times more volatile than Mospec Semiconductor Corp. It trades about 0.15 of its potential returns per unit of risk. Mospec Semiconductor Corp is currently generating about -0.09 per unit of risk. 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sinopower Semiconductor  vs.  Mospec Semiconductor Corp

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.

Mospec Semiconductor Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mospec Semiconductor Corp 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 Sinopower Semiconductor and Mospec Semiconductor

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

The idea behind Sinopower Semiconductor and Mospec Semiconductor Corp 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.