Correlation Between GRINM Semiconductor and Xinke Material

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

Diversification Opportunities for GRINM Semiconductor and Xinke Material

0.87

Correlation Coefficient

GRINM Semiconductor  Xinke Material

Very poor diversification

The 3 months correlation between GRINM and Xinke is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GRINM Semiconductor Materials and Xinke Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinke Material 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 Xinke Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinke Material has no effect on the direction of GRINM Semiconductor i.e., GRINM Semiconductor and Xinke Material go up and down completely randomly.

Pair Corralation between GRINM Semiconductor and Xinke Material

Assuming the 90 days trading horizon GRINM Semiconductor Materials is expected to generate 1.61 times more return on investment than Xinke Material. However, GRINM Semiconductor is 1.61 times more volatile than Xinke Material. It trades about 0.14 of its potential returns per unit of risk. Xinke Material is currently generating about 0.23 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 Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

GRINM Semiconductor Materials  vs.  Xinke Material

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.

Xinke Material

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xinke Material are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinke Material sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRINM Semiconductor and Xinke Material

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

The idea behind GRINM Semiconductor Materials and Xinke Material 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .