Correlation Between Bangyan Technology and Semiconductor Manufacturing

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

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

Diversification Opportunities for Bangyan Technology and Semiconductor Manufacturing

0.74

Correlation Coefficient

Bangyan Technology  Semiconductor Manufacturing

Poor diversification

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

Pair Corralation between Bangyan Technology and Semiconductor Manufacturing

Assuming the 90 days trading horizon Bangyan Technology Co is expected to under-perform the Semiconductor Manufacturing. In addition to that, Bangyan Technology is 1.3 times more volatile than Semiconductor Manufacturing Electronics. It trades about -0.02 of its total potential returns per unit of risk. Semiconductor Manufacturing Electronics is currently generating about -0.01 per unit of volatility. If you would invest  569.00  in Semiconductor Manufacturing Electronics on October 26, 2024 and sell it today you would lose (101.00) from holding Semiconductor Manufacturing Electronics or give up 17.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.34%
Values	Daily Returns

Bangyan Technology Co  vs.  Semiconductor Manufacturing El

Bangyan Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Semiconductor Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bangyan Technology and Semiconductor Manufacturing

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

The idea behind Bangyan Technology Co and Semiconductor Manufacturing Electronics 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.