Correlation Between Semiconductor Manufacturing and Qumei Furniture

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

Diversification Opportunities for Semiconductor Manufacturing and Qumei Furniture

0.85

Correlation Coefficient

Semiconductor Manufacturing  Qumei Furniture

Very poor diversification

The 3 months correlation between Semiconductor and Qumei is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Qumei Furniture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qumei Furniture Group 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 Qumei Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qumei Furniture Group has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Qumei Furniture go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Qumei Furniture

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to under-perform the Qumei Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Semiconductor Manufacturing Electronics is 1.7 times less risky than Qumei Furniture. The stock trades about -0.11 of its potential returns per unit of risk. The Qumei Furniture Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  325.00  in Qumei Furniture Group on December 4, 2024 and sell it today you would lose (31.00) from holding Qumei Furniture Group or give up 9.54% of portfolio value over 90 days.

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

Semiconductor Manufacturing El  vs.  Qumei Furniture Group

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.

Qumei Furniture Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qumei Furniture Group 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 Qumei Furniture

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

The idea behind Semiconductor Manufacturing Electronics and Qumei Furniture Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.