Correlation Between Giantec Semiconductor and Shanghai Fudan

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

Diversification Opportunities for Giantec Semiconductor and Shanghai Fudan

0.74

Correlation Coefficient

Giantec Semiconductor  Shanghai Fudan

Poor diversification

The 3 months correlation between Giantec and Shanghai is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Giantec Semiconductor Corp and Shanghai Fudan Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Fudan Micro 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 Shanghai Fudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Fudan Micro has no effect on the direction of Giantec Semiconductor i.e., Giantec Semiconductor and Shanghai Fudan go up and down completely randomly.

Pair Corralation between Giantec Semiconductor and Shanghai Fudan

Assuming the 90 days trading horizon Giantec Semiconductor is expected to generate 1.75 times less return on investment than Shanghai Fudan. But when comparing it to its historical volatility, Giantec Semiconductor Corp is 1.07 times less risky than Shanghai Fudan. It trades about 0.02 of its potential returns per unit of risk. Shanghai Fudan Microelectronics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,345  in Shanghai Fudan Microelectronics on October 6, 2024 and sell it today you would earn a total of  323.00  from holding Shanghai Fudan Microelectronics or generate 9.66% return on investment over 90 days.

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

Giantec Semiconductor Corp  vs.  Shanghai Fudan Microelectronic

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.

Shanghai Fudan Micro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai Fudan Microelectronics 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 Shanghai Fudan

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

The idea behind Giantec Semiconductor Corp and Shanghai Fudan Microelectronics 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 Commodity Directory module to find actively traded commodities issued by global exchanges.