Correlation Between Chesapeake Granite and Shannon Semiconductor

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

By analyzing existing cross correlation between Chesapeake Granite Wash and Shannon Semiconductor Technology, you can compare the effects of market volatilities on Chesapeake Granite and Shannon Semiconductor 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 Chesapeake Granite with a short position of Shannon Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Granite and Shannon Semiconductor.

Diversification Opportunities for Chesapeake Granite and Shannon Semiconductor

0.0

Correlation Coefficient

Chesapeake Granite  Shannon Semiconductor

Pay attention - limited upside

The 3 months correlation between Chesapeake and Shannon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Granite Wash and Shannon Semiconductor Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shannon Semiconductor and Chesapeake Granite 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 Chesapeake Granite Wash are associated (or correlated) with Shannon Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shannon Semiconductor has no effect on the direction of Chesapeake Granite i.e., Chesapeake Granite and Shannon Semiconductor go up and down completely randomly.

Pair Corralation between Chesapeake Granite and Shannon Semiconductor

Given the investment horizon of 90 days Chesapeake Granite is expected to generate 1.83 times less return on investment than Shannon Semiconductor. But when comparing it to its historical volatility, Chesapeake Granite Wash is 2.66 times less risky than Shannon Semiconductor. It trades about 0.06 of its potential returns per unit of risk. Shannon Semiconductor Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,767  in Shannon Semiconductor Technology on October 21, 2024 and sell it today you would earn a total of  1,044  from holding Shannon Semiconductor Technology or generate 59.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	25.26%
Values	Daily Returns

Chesapeake Granite Wash  vs.  Shannon Semiconductor Technolo

Chesapeake Granite Wash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chesapeake Granite Wash has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Chesapeake Granite is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Shannon Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shannon Semiconductor Technology 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chesapeake Granite and Shannon Semiconductor

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

The idea behind Chesapeake Granite Wash and Shannon Semiconductor Technology 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.