Correlation Between Suzhou Oriental and Ingenic Semiconductor

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

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

Diversification Opportunities for Suzhou Oriental and Ingenic Semiconductor

0.85

Correlation Coefficient

Suzhou Oriental  Ingenic Semiconductor

Very poor diversification

The 3 months correlation between Suzhou and Ingenic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Suzhou Oriental Semiconductor and Ingenic Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingenic Semiconductor and Suzhou Oriental 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 Suzhou Oriental Semiconductor are associated (or correlated) with Ingenic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingenic Semiconductor has no effect on the direction of Suzhou Oriental i.e., Suzhou Oriental and Ingenic Semiconductor go up and down completely randomly.

Pair Corralation between Suzhou Oriental and Ingenic Semiconductor

Assuming the 90 days trading horizon Suzhou Oriental Semiconductor is expected to generate 1.11 times more return on investment than Ingenic Semiconductor. However, Suzhou Oriental is 1.11 times more volatile than Ingenic Semiconductor. It trades about -0.07 of its potential returns per unit of risk. Ingenic Semiconductor is currently generating about -0.08 per unit of risk. If you would invest  4,901  in Suzhou Oriental Semiconductor on October 6, 2024 and sell it today you would lose (1,051) from holding Suzhou Oriental Semiconductor or give up 21.44% of portfolio value over 90 days.

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

Suzhou Oriental Semiconductor  vs.  Ingenic Semiconductor

Suzhou Oriental Semi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzhou Oriental Semiconductor 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.

Ingenic Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingenic Semiconductor 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 Suzhou Oriental and Ingenic Semiconductor

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

The idea behind Suzhou Oriental Semiconductor and Ingenic Semiconductor 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.

Check out your portfolio center.

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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.