Correlation Between Semiconductor Manufacturing and Zoy Home

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

Diversification Opportunities for Semiconductor Manufacturing and Zoy Home

0.54

Correlation Coefficient

Semiconductor Manufacturing  Zoy Home

Very weak diversification

The 3 months correlation between Semiconductor and Zoy is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Zoy Home Furnishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoy Home Furnishing 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 Zoy Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoy Home Furnishing has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Zoy Home go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Zoy Home

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to under-perform the Zoy Home. But the stock apears to be less risky and, when comparing its historical volatility, Semiconductor Manufacturing Electronics is 1.59 times less risky than Zoy Home. The stock trades about -0.11 of its potential returns per unit of risk. The Zoy Home Furnishing is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,130  in Zoy Home Furnishing on December 4, 2024 and sell it today you would earn a total of  17.00  from holding Zoy Home Furnishing or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Semiconductor Manufacturing El  vs.  Zoy Home Furnishing

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zoy Home Furnishing

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zoy Home Furnishing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zoy Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Semiconductor Manufacturing and Zoy Home

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

The idea behind Semiconductor Manufacturing Electronics and Zoy Home Furnishing 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.

Check out your portfolio center.

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.