Correlation Between Giantec Semiconductor and State Grid

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

By analyzing existing cross correlation between Giantec Semiconductor Corp and State Grid InformationCommunication, you can compare the effects of market volatilities on Giantec Semiconductor and State Grid 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 Giantec Semiconductor with a short position of State Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giantec Semiconductor and State Grid.

Diversification Opportunities for Giantec Semiconductor and State Grid

0.01

Correlation Coefficient

Giantec Semiconductor  State Grid

Significant diversification

The 3 months correlation between Giantec and State is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Giantec Semiconductor Corp and State Grid InformationCommunic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Grid Informati and Giantec 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 Giantec Semiconductor Corp are associated (or correlated) with State Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Grid Informati has no effect on the direction of Giantec Semiconductor i.e., Giantec Semiconductor and State Grid go up and down completely randomly.

Pair Corralation between Giantec Semiconductor and State Grid

Assuming the 90 days trading horizon Giantec Semiconductor Corp is expected to generate 2.28 times more return on investment than State Grid. However, Giantec Semiconductor is 2.28 times more volatile than State Grid InformationCommunication. It trades about 0.16 of its potential returns per unit of risk. State Grid InformationCommunication is currently generating about -0.52 per unit of risk. If you would invest  5,788  in Giantec Semiconductor Corp on October 11, 2024 and sell it today you would earn a total of  866.00  from holding Giantec Semiconductor Corp or generate 14.96% return on investment over 90 days.

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

Giantec Semiconductor Corp  vs.  State Grid InformationCommunic

Giantec Semiconductor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Giantec Semiconductor Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Giantec Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

State Grid Informati

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Grid InformationCommunication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, State Grid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Giantec Semiconductor and State Grid

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

The idea behind Giantec Semiconductor Corp and State Grid InformationCommunication 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.