Correlation Between GRINM Semiconductor and China Asset

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

Diversification Opportunities for GRINM Semiconductor and China Asset

-0.48

Correlation Coefficient

GRINM Semiconductor  China Asset

Very good diversification

The 3 months correlation between GRINM and China is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding GRINM Semiconductor Materials and China Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Asset Management 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 China Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Asset Management has no effect on the direction of GRINM Semiconductor i.e., GRINM Semiconductor and China Asset go up and down completely randomly.

Pair Corralation between GRINM Semiconductor and China Asset

Assuming the 90 days trading horizon GRINM Semiconductor Materials is expected to generate 5.23 times more return on investment than China Asset. However, GRINM Semiconductor is 5.23 times more volatile than China Asset Management. It trades about 0.14 of its potential returns per unit of risk. China Asset Management is currently generating about 0.01 per unit of risk. If you would invest  902.00  in GRINM Semiconductor Materials on September 4, 2024 and sell it today you would earn a total of  361.00  from holding GRINM Semiconductor Materials or generate 40.02% return on investment over 90 days.

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

GRINM Semiconductor Materials  vs.  China Asset Management

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.

China Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Asset 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 China Asset

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

The idea behind GRINM Semiconductor Materials and China Asset Management 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.