Correlation Between Semiconductor Manufacturing and Shenzhen Mindray

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

Diversification Opportunities for Semiconductor Manufacturing and Shenzhen Mindray

-0.16

Correlation Coefficient

Semiconductor Manufacturing  Shenzhen Mindray

Good diversification

The 3 months correlation between Semiconductor and Shenzhen is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Shenzhen Mindray Bio Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Mindray Bio 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 Shenzhen Mindray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Mindray Bio has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Shenzhen Mindray go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Shenzhen Mindray

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to generate 1.47 times more return on investment than Shenzhen Mindray. However, Semiconductor Manufacturing is 1.47 times more volatile than Shenzhen Mindray Bio Medical. It trades about 0.04 of its potential returns per unit of risk. Shenzhen Mindray Bio Medical is currently generating about -0.14 per unit of risk. If you would invest  449.00  in Semiconductor Manufacturing Electronics on October 9, 2024 and sell it today you would earn a total of  22.00  from holding Semiconductor Manufacturing Electronics or generate 4.9% return on investment over 90 days.

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

Semiconductor Manufacturing El  vs.  Shenzhen Mindray Bio Medical

Semiconductor Manufacturing

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Semiconductor Manufacturing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shenzhen Mindray Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Mindray Bio Medical 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.

Pair Trading with Semiconductor Manufacturing and Shenzhen Mindray

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

The idea behind Semiconductor Manufacturing Electronics and Shenzhen Mindray Bio Medical 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.