Correlation Between Semiconductor Manufacturing and Shanghai Zhangjiang

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

Diversification Opportunities for Semiconductor Manufacturing and Shanghai Zhangjiang

0.81

Correlation Coefficient

Semiconductor Manufacturing  Shanghai Zhangjiang

Very poor diversification

The 3 months correlation between Semiconductor and Shanghai is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Shanghai Zhangjiang Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Zhangjiang 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 Shanghai Zhangjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Zhangjiang has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Shanghai Zhangjiang go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Shanghai Zhangjiang

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to generate 0.85 times more return on investment than Shanghai Zhangjiang. However, Semiconductor Manufacturing Electronics is 1.18 times less risky than Shanghai Zhangjiang. It trades about -0.06 of its potential returns per unit of risk. Shanghai Zhangjiang Hi Tech is currently generating about -0.07 per unit of risk. If you would invest  531.00  in Semiconductor Manufacturing Electronics on December 29, 2024 and sell it today you would lose (39.00) from holding Semiconductor Manufacturing Electronics or give up 7.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.31%
Values	Daily Returns

Semiconductor Manufacturing El  vs.  Shanghai Zhangjiang Hi Tech

Semiconductor Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Semiconductor Manufacturing Electronics 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.

Shanghai Zhangjiang

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shanghai Zhangjiang Hi Tech 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 Shanghai Zhangjiang

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

The idea behind Semiconductor Manufacturing Electronics and Shanghai Zhangjiang Hi Tech 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.