Correlation Between GRINM Semiconductor and Guangzhou Ruoyuchen

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

Diversification Opportunities for GRINM Semiconductor and Guangzhou Ruoyuchen

0.6

Correlation Coefficient

GRINM Semiconductor  Guangzhou Ruoyuchen

Poor diversification

The 3 months correlation between GRINM and Guangzhou is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GRINM Semiconductor Materials and Guangzhou Ruoyuchen Informatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Ruoyuchen 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 Guangzhou Ruoyuchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Ruoyuchen has no effect on the direction of GRINM Semiconductor i.e., GRINM Semiconductor and Guangzhou Ruoyuchen go up and down completely randomly.

Pair Corralation between GRINM Semiconductor and Guangzhou Ruoyuchen

Assuming the 90 days trading horizon GRINM Semiconductor is expected to generate 2.39 times less return on investment than Guangzhou Ruoyuchen. In addition to that, GRINM Semiconductor is 1.1 times more volatile than Guangzhou Ruoyuchen Information. It trades about 0.15 of its total potential returns per unit of risk. Guangzhou Ruoyuchen Information is currently generating about 0.38 per unit of volatility. If you would invest  1,111  in Guangzhou Ruoyuchen Information on September 18, 2024 and sell it today you would earn a total of  1,633  from holding Guangzhou Ruoyuchen Information or generate 146.98% 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.  Guangzhou Ruoyuchen Informatio

GRINM Semiconductor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GRINM Semiconductor Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GRINM Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangzhou Ruoyuchen

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Ruoyuchen Information are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Ruoyuchen sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRINM Semiconductor and Guangzhou Ruoyuchen

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

The idea behind GRINM Semiconductor Materials and Guangzhou Ruoyuchen Information 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.