Correlation Between GRINM Semiconductor and Kangxin New

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

Diversification Opportunities for GRINM Semiconductor and Kangxin New

0.82

Correlation Coefficient

GRINM Semiconductor  Kangxin New

Very poor diversification

The 3 months correlation between GRINM and Kangxin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding GRINM Semiconductor Materials and Kangxin New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kangxin New Materials 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 Kangxin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kangxin New Materials has no effect on the direction of GRINM Semiconductor i.e., GRINM Semiconductor and Kangxin New go up and down completely randomly.

Pair Corralation between GRINM Semiconductor and Kangxin New

Assuming the 90 days trading horizon GRINM Semiconductor is expected to generate 1.73 times less return on investment than Kangxin New. In addition to that, GRINM Semiconductor is 1.2 times more volatile than Kangxin New Materials. It trades about 0.15 of its total potential returns per unit of risk. Kangxin New Materials is currently generating about 0.31 per unit of volatility. If you would invest  141.00  in Kangxin New Materials on September 12, 2024 and sell it today you would earn a total of  128.00  from holding Kangxin New Materials or generate 90.78% return on investment over 90 days.

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

GRINM Semiconductor Materials  vs.  Kangxin New Materials

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.

Kangxin New Materials

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kangxin New Materials are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kangxin New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRINM Semiconductor and Kangxin New

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

The idea behind GRINM Semiconductor Materials and Kangxin New Materials 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.