Correlation Between GRINM Semiconductor and Guobo Electronics

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

Diversification Opportunities for GRINM Semiconductor and Guobo Electronics

0.75

Correlation Coefficient

GRINM Semiconductor  Guobo Electronics

Poor diversification

The 3 months correlation between GRINM and Guobo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GRINM Semiconductor Materials and Guobo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guobo Electronics 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 Guobo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guobo Electronics has no effect on the direction of GRINM Semiconductor i.e., GRINM Semiconductor and Guobo Electronics go up and down completely randomly.

Pair Corralation between GRINM Semiconductor and Guobo Electronics

Assuming the 90 days trading horizon GRINM Semiconductor Materials is expected to under-perform the Guobo Electronics. But the stock apears to be less risky and, when comparing its historical volatility, GRINM Semiconductor Materials is 1.2 times less risky than Guobo Electronics. The stock trades about -0.09 of its potential returns per unit of risk. The Guobo Electronics Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  5,049  in Guobo Electronics Co on October 10, 2024 and sell it today you would lose (561.00) from holding Guobo Electronics Co or give up 11.11% of portfolio value over 90 days.

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

GRINM Semiconductor Materials  vs.  Guobo Electronics Co

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.

Guobo Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guobo Electronics Co 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 Guobo Electronics

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

The idea behind GRINM Semiconductor Materials and Guobo Electronics Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.