Correlation Between Thinkon Semiconductor and NBTM New

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

Diversification Opportunities for Thinkon Semiconductor and NBTM New

0.51

Correlation Coefficient

Thinkon Semiconductor  NBTM New

Very weak diversification

The 3 months correlation between Thinkon and NBTM is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Thinkon Semiconductor Jinzhou and NBTM New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBTM New Materials 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 NBTM New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBTM New Materials has no effect on the direction of Thinkon Semiconductor i.e., Thinkon Semiconductor and NBTM New go up and down completely randomly.

Pair Corralation between Thinkon Semiconductor and NBTM New

Assuming the 90 days trading horizon Thinkon Semiconductor Jinzhou is expected to under-perform the NBTM New. But the stock apears to be less risky and, when comparing its historical volatility, Thinkon Semiconductor Jinzhou is 1.24 times less risky than NBTM New. The stock trades about -0.05 of its potential returns per unit of risk. The NBTM New Materials is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,558  in NBTM New Materials on September 29, 2024 and sell it today you would earn a total of  148.00  from holding NBTM New Materials or generate 9.5% return on investment over 90 days.

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

Thinkon Semiconductor Jinzhou  vs.  NBTM New Materials

Thinkon Semiconductor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thinkon Semiconductor Jinzhou are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Thinkon Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

NBTM New Materials

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Thinkon Semiconductor and NBTM New

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

The idea behind Thinkon Semiconductor Jinzhou and NBTM New 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.