Correlation Between Semiconductor Manufacturing and Zhejiang Kingland

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

Diversification Opportunities for Semiconductor Manufacturing and Zhejiang Kingland

0.31

Correlation Coefficient

Semiconductor Manufacturing  Zhejiang Kingland

Weak diversification

The 3 months correlation between Semiconductor and Zhejiang is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Zhejiang Kingland Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Kingland 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 Zhejiang Kingland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Kingland has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Zhejiang Kingland go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Zhejiang Kingland

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to generate 1.52 times more return on investment than Zhejiang Kingland. However, Semiconductor Manufacturing is 1.52 times more volatile than Zhejiang Kingland Pipeline. It trades about 0.09 of its potential returns per unit of risk. Zhejiang Kingland Pipeline is currently generating about 0.05 per unit of risk. If you would invest  381.00  in Semiconductor Manufacturing Electronics on October 4, 2024 and sell it today you would earn a total of  132.00  from holding Semiconductor Manufacturing Electronics or generate 34.65% return on investment over 90 days.

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

Semiconductor Manufacturing El  vs.  Zhejiang Kingland Pipeline

Semiconductor Manufacturing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Zhejiang Kingland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Kingland Pipeline 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 Semiconductor Manufacturing and Zhejiang Kingland

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

The idea behind Semiconductor Manufacturing Electronics and Zhejiang Kingland Pipeline 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.