Correlation Between Amlogic Shanghai and Techshine Electronics

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

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

Diversification Opportunities for Amlogic Shanghai and Techshine Electronics

0.45

Correlation Coefficient

Amlogic Shanghai  Techshine Electronics

Very weak diversification

The 3 months correlation between Amlogic and Techshine is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Amlogic Shanghai Co and Techshine Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techshine Electronics and Amlogic Shanghai 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 Amlogic Shanghai Co are associated (or correlated) with Techshine Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techshine Electronics has no effect on the direction of Amlogic Shanghai i.e., Amlogic Shanghai and Techshine Electronics go up and down completely randomly.

Pair Corralation between Amlogic Shanghai and Techshine Electronics

Assuming the 90 days trading horizon Amlogic Shanghai Co is expected to under-perform the Techshine Electronics. In addition to that, Amlogic Shanghai is 1.24 times more volatile than Techshine Electronics Co. It trades about -0.09 of its total potential returns per unit of risk. Techshine Electronics Co is currently generating about -0.06 per unit of volatility. If you would invest  2,190  in Techshine Electronics Co on October 7, 2024 and sell it today you would lose (320.00) from holding Techshine Electronics Co or give up 14.61% of portfolio value over 90 days.

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

Amlogic Shanghai Co  vs.  Techshine Electronics Co

Amlogic Shanghai

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amlogic Shanghai Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Techshine Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techshine Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Amlogic Shanghai and Techshine Electronics

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

The idea behind Amlogic Shanghai Co and Techshine Electronics 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.