Correlation Between Guotai Epoint and GRINM Semiconductor

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

By analyzing existing cross correlation between Guotai Epoint Software and GRINM Semiconductor Materials, you can compare the effects of market volatilities on Guotai Epoint and GRINM Semiconductor 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 Guotai Epoint with a short position of GRINM Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guotai Epoint and GRINM Semiconductor.

Diversification Opportunities for Guotai Epoint and GRINM Semiconductor

0.56

Correlation Coefficient

Guotai Epoint  GRINM Semiconductor

Very weak diversification

The 3 months correlation between Guotai and GRINM is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and GRINM Semiconductor Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRINM Semiconductor and Guotai Epoint 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 Guotai Epoint Software are associated (or correlated) with GRINM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRINM Semiconductor has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and GRINM Semiconductor go up and down completely randomly.

Pair Corralation between Guotai Epoint and GRINM Semiconductor

Assuming the 90 days trading horizon Guotai Epoint Software is expected to generate 1.23 times more return on investment than GRINM Semiconductor. However, Guotai Epoint is 1.23 times more volatile than GRINM Semiconductor Materials. It trades about 0.05 of its potential returns per unit of risk. GRINM Semiconductor Materials is currently generating about 0.01 per unit of risk. If you would invest  3,037  in Guotai Epoint Software on December 25, 2024 and sell it today you would earn a total of  177.00  from holding Guotai Epoint Software or generate 5.83% return on investment over 90 days.

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

Guotai Epoint Software  vs.  GRINM Semiconductor Materials

Guotai Epoint Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guotai Epoint Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guotai Epoint may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GRINM Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRINM Semiconductor Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GRINM Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guotai Epoint and GRINM Semiconductor

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

The idea behind Guotai Epoint Software and GRINM Semiconductor 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.