Correlation Between Semiconductor Manufacturing and Jiangsu Cai

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

Diversification Opportunities for Semiconductor Manufacturing and Jiangsu Cai

0.36

Correlation Coefficient

Semiconductor Manufacturing  Jiangsu Cai

Weak diversification

The 3 months correlation between Semiconductor and Jiangsu is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Jiangsu Cai Qin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Cai Qin 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 Jiangsu Cai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Cai Qin has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Jiangsu Cai go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Jiangsu Cai

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to under-perform the Jiangsu Cai. But the stock apears to be less risky and, when comparing its historical volatility, Semiconductor Manufacturing Electronics is 2.6 times less risky than Jiangsu Cai. The stock trades about -0.06 of its potential returns per unit of risk. The Jiangsu Cai Qin is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,874  in Jiangsu Cai Qin on December 28, 2024 and sell it today you would earn a total of  866.00  from holding Jiangsu Cai Qin or generate 46.21% 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.  Jiangsu Cai Qin

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.

Jiangsu Cai Qin

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Cai Qin are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Cai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semiconductor Manufacturing and Jiangsu Cai

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

The idea behind Semiconductor Manufacturing Electronics and Jiangsu Cai Qin 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.