Correlation Between GRINM Semiconductor and New Hope

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

Diversification Opportunities for GRINM Semiconductor and New Hope

-0.65

Correlation Coefficient

GRINM Semiconductor  New Hope

Excellent diversification

The 3 months correlation between GRINM and New is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding GRINM Semiconductor Materials and New Hope Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope Dairy 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 New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope Dairy has no effect on the direction of GRINM Semiconductor i.e., GRINM Semiconductor and New Hope go up and down completely randomly.

Pair Corralation between GRINM Semiconductor and New Hope

Assuming the 90 days trading horizon GRINM Semiconductor Materials is expected to under-perform the New Hope. In addition to that, GRINM Semiconductor is 1.09 times more volatile than New Hope Dairy. It trades about -0.02 of its total potential returns per unit of risk. New Hope Dairy is currently generating about 0.0 per unit of volatility. If you would invest  1,666  in New Hope Dairy on October 24, 2024 and sell it today you would lose (142.00) from holding New Hope Dairy or give up 8.52% of portfolio value over 90 days.

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

GRINM Semiconductor Materials  vs.  New Hope Dairy

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.

New Hope Dairy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Hope Dairy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, New Hope sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRINM Semiconductor and New Hope

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

The idea behind GRINM Semiconductor Materials and New Hope Dairy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.