Correlation Between Giantec Semiconductor and Sinosteel Luonai

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

Diversification Opportunities for Giantec Semiconductor and Sinosteel Luonai

0.55

Correlation Coefficient

Giantec Semiconductor  Sinosteel Luonai

Very weak diversification

The 3 months correlation between Giantec and Sinosteel is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Giantec Semiconductor Corp and Sinosteel Luonai Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinosteel Luonai Mat 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 Sinosteel Luonai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinosteel Luonai Mat has no effect on the direction of Giantec Semiconductor i.e., Giantec Semiconductor and Sinosteel Luonai go up and down completely randomly.

Pair Corralation between Giantec Semiconductor and Sinosteel Luonai

Assuming the 90 days trading horizon Giantec Semiconductor Corp is expected to generate 1.97 times more return on investment than Sinosteel Luonai. However, Giantec Semiconductor is 1.97 times more volatile than Sinosteel Luonai Materials. It trades about 0.03 of its potential returns per unit of risk. Sinosteel Luonai Materials is currently generating about -0.3 per unit of risk. If you would invest  5,782  in Giantec Semiconductor Corp on October 3, 2024 and sell it today you would earn a total of  70.00  from holding Giantec Semiconductor Corp or generate 1.21% 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.  Sinosteel Luonai Materials

Giantec Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giantec Semiconductor Corp 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.

Sinosteel Luonai Mat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinosteel Luonai Materials 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 Giantec Semiconductor and Sinosteel Luonai

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

The idea behind Giantec Semiconductor Corp and Sinosteel Luonai Materials 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.