Correlation Between Semiconductor Manufacturing and Jiangsu Changhai

Can any of the company-specific risk be diversified away by investing in both Semiconductor Manufacturing and Jiangsu Changhai 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 Changhai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Semiconductor Manufacturing Intl and Jiangsu Changhai Compos, you can compare the effects of market volatilities on Semiconductor Manufacturing and Jiangsu Changhai 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 Changhai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and Jiangsu Changhai.

Diversification Opportunities for Semiconductor Manufacturing and Jiangsu Changhai

-0.16

Correlation Coefficient

Semiconductor Manufacturing  Jiangsu Changhai

Good diversification

The 3 months correlation between Semiconductor and Jiangsu is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing In and Jiangsu Changhai Compos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Changhai Compos 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 Intl are associated (or correlated) with Jiangsu Changhai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Changhai Compos has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Jiangsu Changhai go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Jiangsu Changhai

Assuming the 90 days trading horizon Semiconductor Manufacturing Intl is expected to under-perform the Jiangsu Changhai. In addition to that, Semiconductor Manufacturing is 1.87 times more volatile than Jiangsu Changhai Compos. It trades about -0.03 of its total potential returns per unit of risk. Jiangsu Changhai Compos is currently generating about 0.05 per unit of volatility. If you would invest  1,111  in Jiangsu Changhai Compos on December 28, 2024 and sell it today you would earn a total of  37.00  from holding Jiangsu Changhai Compos or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Semiconductor Manufacturing In  vs.  Jiangsu Changhai Compos

Semiconductor Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Semiconductor Manufacturing Intl 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.

Jiangsu Changhai Compos

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Changhai Compos are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiangsu Changhai 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 Jiangsu Changhai

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

The idea behind Semiconductor Manufacturing Intl and Jiangsu Changhai Compos 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.