Correlation Between Powerchip Semiconductor and AP Memory

Can any of the company-specific risk be diversified away by investing in both Powerchip Semiconductor and AP Memory 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 AP Memory 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 AP Memory Technology, you can compare the effects of market volatilities on Powerchip Semiconductor and AP Memory 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 AP Memory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powerchip Semiconductor and AP Memory.

Diversification Opportunities for Powerchip Semiconductor and AP Memory

0.11

Correlation Coefficient

Powerchip Semiconductor  AP Memory

Average diversification

The 3 months correlation between Powerchip and 6531 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Powerchip Semiconductor Manufa and AP Memory Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Memory Technology 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 AP Memory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Memory Technology has no effect on the direction of Powerchip Semiconductor i.e., Powerchip Semiconductor and AP Memory go up and down completely randomly.

Pair Corralation between Powerchip Semiconductor and AP Memory

Assuming the 90 days trading horizon Powerchip Semiconductor Manufacturing is expected to generate 1.72 times more return on investment than AP Memory. However, Powerchip Semiconductor is 1.72 times more volatile than AP Memory Technology. It trades about 0.05 of its potential returns per unit of risk. AP Memory Technology is currently generating about -0.1 per unit of risk. If you would invest  1,660  in Powerchip Semiconductor Manufacturing on December 25, 2024 and sell it today you would earn a total of  100.00  from holding Powerchip Semiconductor Manufacturing or generate 6.02% return on investment over 90 days.

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

Powerchip Semiconductor Manufa  vs.  AP Memory Technology

Powerchip Semiconductor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Powerchip Semiconductor Manufacturing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Powerchip Semiconductor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AP Memory Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days AP Memory Technology 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Powerchip Semiconductor and AP Memory

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

The idea behind Powerchip Semiconductor Manufacturing and AP Memory Technology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.