Correlation Between Thinkon Semiconductor and Guotai Epoint

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

Diversification Opportunities for Thinkon Semiconductor and Guotai Epoint

0.78

Correlation Coefficient

Thinkon Semiconductor  Guotai Epoint

Poor diversification

The 3 months correlation between Thinkon and Guotai is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Thinkon Semiconductor Jinzhou and Guotai Epoint Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guotai Epoint Software 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 Guotai Epoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guotai Epoint Software has no effect on the direction of Thinkon Semiconductor i.e., Thinkon Semiconductor and Guotai Epoint go up and down completely randomly.

Pair Corralation between Thinkon Semiconductor and Guotai Epoint

Assuming the 90 days trading horizon Thinkon Semiconductor Jinzhou is expected to generate 1.11 times more return on investment than Guotai Epoint. However, Thinkon Semiconductor is 1.11 times more volatile than Guotai Epoint Software. It trades about -0.01 of its potential returns per unit of risk. Guotai Epoint Software is currently generating about -0.02 per unit of risk. If you would invest  4,498  in Thinkon Semiconductor Jinzhou on October 26, 2024 and sell it today you would lose (2,120) from holding Thinkon Semiconductor Jinzhou or give up 47.13% of portfolio value over 90 days.

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

Thinkon Semiconductor Jinzhou  vs.  Guotai Epoint Software

Thinkon Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thinkon Semiconductor Jinzhou 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.

Guotai Epoint Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guotai Epoint Software 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.

Pair Trading with Thinkon Semiconductor and Guotai Epoint

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

The idea behind Thinkon Semiconductor Jinzhou and Guotai Epoint Software 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.