Correlation Between Semiconductor Manufacturing and SSAW Hotels

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

Diversification Opportunities for Semiconductor Manufacturing and SSAW Hotels

0.56

Correlation Coefficient

Semiconductor Manufacturing  SSAW Hotels

Very weak diversification

The 3 months correlation between Semiconductor and SSAW is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and SSAW Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAW Hotels Resorts 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 SSAW Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSAW Hotels Resorts has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and SSAW Hotels go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and SSAW Hotels

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to generate 0.64 times more return on investment than SSAW Hotels. However, Semiconductor Manufacturing Electronics is 1.57 times less risky than SSAW Hotels. It trades about 0.06 of its potential returns per unit of risk. SSAW Hotels Resorts is currently generating about 0.02 per unit of risk. If you would invest  418.00  in Semiconductor Manufacturing Electronics on October 11, 2024 and sell it today you would earn a total of  38.00  from holding Semiconductor Manufacturing Electronics or generate 9.09% return on investment over 90 days.

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

Semiconductor Manufacturing El  vs.  SSAW Hotels Resorts

Semiconductor Manufacturing

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 4 (%) 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.

SSAW Hotels Resorts

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SSAW Hotels Resorts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SSAW Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Semiconductor Manufacturing and SSAW Hotels

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

The idea behind Semiconductor Manufacturing Electronics and SSAW Hotels Resorts 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.