Correlation Between ACM Research and Goke Microelectronics

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

By analyzing existing cross correlation between ACM Research Shanghai and Goke Microelectronics Co, you can compare the effects of market volatilities on ACM Research and Goke Microelectronics 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 ACM Research with a short position of Goke Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACM Research and Goke Microelectronics.

Diversification Opportunities for ACM Research and Goke Microelectronics

0.85

Correlation Coefficient

ACM Research  Goke Microelectronics

Very poor diversification

The 3 months correlation between ACM and Goke is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ACM Research Shanghai and Goke Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goke Microelectronics and ACM Research 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 ACM Research Shanghai are associated (or correlated) with Goke Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goke Microelectronics has no effect on the direction of ACM Research i.e., ACM Research and Goke Microelectronics go up and down completely randomly.

Pair Corralation between ACM Research and Goke Microelectronics

Assuming the 90 days trading horizon ACM Research Shanghai is expected to generate 0.86 times more return on investment than Goke Microelectronics. However, ACM Research Shanghai is 1.17 times less risky than Goke Microelectronics. It trades about 0.01 of its potential returns per unit of risk. Goke Microelectronics Co is currently generating about 0.01 per unit of risk. If you would invest  10,960  in ACM Research Shanghai on September 30, 2024 and sell it today you would lose (488.00) from holding ACM Research Shanghai or give up 4.45% of portfolio value over 90 days.

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

ACM Research Shanghai  vs.  Goke Microelectronics Co

ACM Research Shanghai

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ACM Research Shanghai are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ACM Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goke Microelectronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goke Microelectronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Goke Microelectronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACM Research and Goke Microelectronics

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

The idea behind ACM Research Shanghai and Goke Microelectronics Co 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 CEOs Directory module to screen CEOs from public companies around the world.