Correlation Between Semiconductor Manufacturing and Guangdong Ellington

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

Diversification Opportunities for Semiconductor Manufacturing and Guangdong Ellington

0.35

Correlation Coefficient

Semiconductor Manufacturing  Guangdong Ellington

Weak diversification

The 3 months correlation between Semiconductor and Guangdong is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Guangdong Ellington Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Ellington 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 Ellington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Ellington has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Guangdong Ellington go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Guangdong Ellington

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to under-perform the Guangdong Ellington. But the stock apears to be less risky and, when comparing its historical volatility, Semiconductor Manufacturing Electronics is 1.15 times less risky than Guangdong Ellington. The stock trades about 0.0 of its potential returns per unit of risk. The Guangdong Ellington Electronics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  796.00  in Guangdong Ellington Electronics on October 5, 2024 and sell it today you would earn a total of  84.00  from holding Guangdong Ellington Electronics or generate 10.55% 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.  Guangdong Ellington Electronic

Semiconductor Manufacturing

Risk-Adjusted Performance

0 of 100

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 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 Ellington

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangdong Ellington 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.

Pair Trading with Semiconductor Manufacturing and Guangdong Ellington

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

The idea behind Semiconductor Manufacturing Electronics and Guangdong Ellington Electronics 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.