Correlation Between Semiconductor Manufacturing and Suzhou Douson

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

Diversification Opportunities for Semiconductor Manufacturing and Suzhou Douson

0.55

Correlation Coefficient

Semiconductor Manufacturing  Suzhou Douson

Very weak diversification

The 3 months correlation between Semiconductor and Suzhou is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Suzhou Douson Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Douson Drilling 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 Suzhou Douson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Douson Drilling has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Suzhou Douson go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Suzhou Douson

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to under-perform the Suzhou Douson. But the stock apears to be less risky and, when comparing its historical volatility, Semiconductor Manufacturing Electronics is 2.26 times less risky than Suzhou Douson. The stock trades about -0.05 of its potential returns per unit of risk. The Suzhou Douson Drilling is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,506  in Suzhou Douson Drilling on December 27, 2024 and sell it today you would earn a total of  877.00  from holding Suzhou Douson Drilling or generate 35.0% 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.  Suzhou Douson Drilling

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 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.

Suzhou Douson Drilling

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suzhou Douson Drilling are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suzhou Douson sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semiconductor Manufacturing and Suzhou Douson

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

The idea behind Semiconductor Manufacturing Electronics and Suzhou Douson Drilling 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.