Correlation Between Semiconductor Manufacturing and Guangdong Jingyi

Can any of the company-specific risk be diversified away by investing in both Semiconductor Manufacturing and Guangdong Jingyi 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 Semiconductor Manufacturing and Guangdong Jingyi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Semiconductor Manufacturing Electronics and Guangdong Jingyi Metal, you can compare the effects of market volatilities on Semiconductor Manufacturing and Guangdong Jingyi 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 Semiconductor Manufacturing with a short position of Guangdong Jingyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and Guangdong Jingyi.

Diversification Opportunities for Semiconductor Manufacturing and Guangdong Jingyi

0.87

Correlation Coefficient

Semiconductor Manufacturing  Guangdong Jingyi

Very poor diversification

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

Pair Corralation between Semiconductor Manufacturing and Guangdong Jingyi

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to under-perform the Guangdong Jingyi. But the stock apears to be less risky and, when comparing its historical volatility, Semiconductor Manufacturing Electronics is 1.59 times less risky than Guangdong Jingyi. The stock trades about -0.4 of its potential returns per unit of risk. The Guangdong Jingyi Metal is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  750.00  in Guangdong Jingyi Metal on October 4, 2024 and sell it today you would lose (104.00) from holding Guangdong Jingyi Metal or give up 13.87% of portfolio value over 90 days.

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

Semiconductor Manufacturing El  vs.  Guangdong Jingyi Metal

Semiconductor Manufacturing

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Semiconductor Manufacturing Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Semiconductor Manufacturing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guangdong Jingyi Metal

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Guangdong Jingyi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Semiconductor Manufacturing and Guangdong Jingyi

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

The idea behind Semiconductor Manufacturing Electronics and Guangdong Jingyi Metal 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 Stocks Directory module to find actively traded stocks across global markets.