Correlation Between GRINM Semiconductor and China State

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

Diversification Opportunities for GRINM Semiconductor and China State

0.32

Correlation Coefficient

GRINM Semiconductor  China State

Weak diversification

The 3 months correlation between GRINM and China is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GRINM Semiconductor Materials and China State Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China State Construction 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 State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China State Construction has no effect on the direction of GRINM Semiconductor i.e., GRINM Semiconductor and China State go up and down completely randomly.

Pair Corralation between GRINM Semiconductor and China State

Assuming the 90 days trading horizon GRINM Semiconductor Materials is expected to under-perform the China State. In addition to that, GRINM Semiconductor is 1.68 times more volatile than China State Construction. It trades about -0.38 of its total potential returns per unit of risk. China State Construction is currently generating about -0.16 per unit of volatility. If you would invest  602.00  in China State Construction on October 6, 2024 and sell it today you would lose (24.00) from holding China State Construction or give up 3.99% of portfolio value over 90 days.

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

GRINM Semiconductor Materials  vs.  China State Construction

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

China State Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China State Construction 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.

Pair Trading with GRINM Semiconductor and China State

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

The idea behind GRINM Semiconductor Materials and China State Construction 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.