Correlation Between Giantec Semiconductor and ACM Research

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

Diversification Opportunities for Giantec Semiconductor and ACM Research

0.4

Correlation Coefficient

Giantec Semiconductor  ACM Research

Very weak diversification

The 3 months correlation between Giantec and ACM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Giantec Semiconductor Corp and ACM Research Shanghai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACM Research Shanghai 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 ACM Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACM Research Shanghai has no effect on the direction of Giantec Semiconductor i.e., Giantec Semiconductor and ACM Research go up and down completely randomly.

Pair Corralation between Giantec Semiconductor and ACM Research

Assuming the 90 days trading horizon Giantec Semiconductor Corp is expected to generate 2.16 times more return on investment than ACM Research. However, Giantec Semiconductor is 2.16 times more volatile than ACM Research Shanghai. It trades about 0.12 of its potential returns per unit of risk. ACM Research Shanghai is currently generating about -0.03 per unit of risk. If you would invest  6,429  in Giantec Semiconductor Corp on December 24, 2024 and sell it today you would earn a total of  1,721  from holding Giantec Semiconductor Corp or generate 26.77% return on investment over 90 days.

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

Giantec Semiconductor Corp  vs.  ACM Research Shanghai

Giantec Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Giantec Semiconductor Corp are ranked lower than 9 (%) 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.

ACM Research Shanghai

Risk-Adjusted Performance

Very Weak

Over the last 90 days ACM Research Shanghai has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Giantec Semiconductor and ACM Research

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

The idea behind Giantec Semiconductor Corp and ACM Research Shanghai 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.