Correlation Between GRINM Semiconductor and Shandong

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

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

Diversification Opportunities for GRINM Semiconductor and Shandong

0.73

Correlation Coefficient

GRINM Semiconductor  Shandong

Poor diversification

The 3 months correlation between GRINM and Shandong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding GRINM Semiconductor Materials and Shandong Hi Speed RoadBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Hi Speed and GRINM 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 GRINM Semiconductor Materials are associated (or correlated) with Shandong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Hi Speed has no effect on the direction of GRINM Semiconductor i.e., GRINM Semiconductor and Shandong go up and down completely randomly.

Pair Corralation between GRINM Semiconductor and Shandong

Assuming the 90 days trading horizon GRINM Semiconductor Materials is expected to generate 1.65 times more return on investment than Shandong. However, GRINM Semiconductor is 1.65 times more volatile than Shandong Hi Speed RoadBridge. It trades about 0.04 of its potential returns per unit of risk. Shandong Hi Speed RoadBridge is currently generating about 0.01 per unit of risk. If you would invest  914.00  in GRINM Semiconductor Materials on October 12, 2024 and sell it today you would earn a total of  121.00  from holding GRINM Semiconductor Materials or generate 13.24% return on investment over 90 days.

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

GRINM Semiconductor Materials  vs.  Shandong Hi Speed RoadBridge

GRINM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRINM Semiconductor Materials 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.

Shandong Hi Speed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shandong Hi Speed RoadBridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shandong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GRINM Semiconductor and Shandong

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

The idea behind GRINM Semiconductor Materials and Shandong Hi Speed RoadBridge 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.