Correlation Between Powerchip Semiconductor and Chinese Maritime

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

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

Diversification Opportunities for Powerchip Semiconductor and Chinese Maritime

0.25

Correlation Coefficient

Powerchip Semiconductor  Chinese Maritime

Modest diversification

The 3 months correlation between Powerchip and Chinese is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Powerchip Semiconductor Manufa and Chinese Maritime Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Maritime Tra and Powerchip 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 Powerchip Semiconductor Manufacturing are associated (or correlated) with Chinese Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Maritime Tra has no effect on the direction of Powerchip Semiconductor i.e., Powerchip Semiconductor and Chinese Maritime go up and down completely randomly.

Pair Corralation between Powerchip Semiconductor and Chinese Maritime

Assuming the 90 days trading horizon Powerchip Semiconductor Manufacturing is expected to under-perform the Chinese Maritime. In addition to that, Powerchip Semiconductor is 1.12 times more volatile than Chinese Maritime Transport. It trades about -0.22 of its total potential returns per unit of risk. Chinese Maritime Transport is currently generating about 0.02 per unit of volatility. If you would invest  4,155  in Chinese Maritime Transport on September 13, 2024 and sell it today you would earn a total of  40.00  from holding Chinese Maritime Transport or generate 0.96% return on investment over 90 days.

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

Powerchip Semiconductor Manufa  vs.  Chinese Maritime Transport

Powerchip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powerchip Semiconductor Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Chinese Maritime Tra

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chinese Maritime Transport are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chinese Maritime 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 Powerchip Semiconductor and Chinese Maritime

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

The idea behind Powerchip Semiconductor Manufacturing and Chinese Maritime Transport 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.