Correlation Between Sinopower Semiconductor and Excelliance MOS

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

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

Diversification Opportunities for Sinopower Semiconductor and Excelliance MOS

0.73

Correlation Coefficient

Sinopower Semiconductor  Excelliance MOS

Poor diversification

The 3 months correlation between Sinopower and Excelliance is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sinopower Semiconductor and Excelliance MOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelliance MOS 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 Excelliance MOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelliance MOS has no effect on the direction of Sinopower Semiconductor i.e., Sinopower Semiconductor and Excelliance MOS go up and down completely randomly.

Pair Corralation between Sinopower Semiconductor and Excelliance MOS

Assuming the 90 days trading horizon Sinopower Semiconductor is expected to generate 1.46 times more return on investment than Excelliance MOS. However, Sinopower Semiconductor is 1.46 times more volatile than Excelliance MOS. It trades about 0.15 of its potential returns per unit of risk. Excelliance MOS is currently generating about 0.04 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 Together
Strength	Significant
Accuracy	98.21%
Values	Daily Returns

Sinopower Semiconductor  vs.  Excelliance MOS

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.

Excelliance MOS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Excelliance MOS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Excelliance MOS 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 Sinopower Semiconductor and Excelliance MOS

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

The idea behind Sinopower Semiconductor and Excelliance MOS 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.