Correlation Between Thinkon Semiconductor and Sichuan Qiaoyuan

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

By analyzing existing cross correlation between Thinkon Semiconductor Jinzhou and Sichuan Qiaoyuan Gas, you can compare the effects of market volatilities on Thinkon Semiconductor and Sichuan Qiaoyuan 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 Thinkon Semiconductor with a short position of Sichuan Qiaoyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thinkon Semiconductor and Sichuan Qiaoyuan.

Diversification Opportunities for Thinkon Semiconductor and Sichuan Qiaoyuan

0.23

Correlation Coefficient

Thinkon Semiconductor  Sichuan Qiaoyuan

Modest diversification

The 3 months correlation between Thinkon and Sichuan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Thinkon Semiconductor Jinzhou and Sichuan Qiaoyuan Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Qiaoyuan Gas and Thinkon 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 Thinkon Semiconductor Jinzhou are associated (or correlated) with Sichuan Qiaoyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Qiaoyuan Gas has no effect on the direction of Thinkon Semiconductor i.e., Thinkon Semiconductor and Sichuan Qiaoyuan go up and down completely randomly.

Pair Corralation between Thinkon Semiconductor and Sichuan Qiaoyuan

Assuming the 90 days trading horizon Thinkon Semiconductor Jinzhou is expected to under-perform the Sichuan Qiaoyuan. In addition to that, Thinkon Semiconductor is 1.83 times more volatile than Sichuan Qiaoyuan Gas. It trades about -0.02 of its total potential returns per unit of risk. Sichuan Qiaoyuan Gas is currently generating about 0.04 per unit of volatility. If you would invest  2,519  in Sichuan Qiaoyuan Gas on October 11, 2024 and sell it today you would earn a total of  971.00  from holding Sichuan Qiaoyuan Gas or generate 38.55% return on investment over 90 days.

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

Thinkon Semiconductor Jinzhou  vs.  Sichuan Qiaoyuan Gas

Thinkon Semiconductor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thinkon Semiconductor Jinzhou are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Thinkon Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sichuan Qiaoyuan Gas

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Thinkon Semiconductor and Sichuan Qiaoyuan

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

The idea behind Thinkon Semiconductor Jinzhou and Sichuan Qiaoyuan Gas 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.