Correlation Between China Railway and SIVERS SEMICONDUCTORS

Can any of the company-specific risk be diversified away by investing in both China Railway and SIVERS SEMICONDUCTORS 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 China Railway and SIVERS SEMICONDUCTORS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Railway Group and SIVERS SEMICONDUCTORS AB, you can compare the effects of market volatilities on China Railway and SIVERS SEMICONDUCTORS 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 China Railway with a short position of SIVERS SEMICONDUCTORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and SIVERS SEMICONDUCTORS.

Diversification Opportunities for China Railway and SIVERS SEMICONDUCTORS

0.19

Correlation Coefficient

China Railway  SIVERS SEMICONDUCTORS

Average diversification

The 3 months correlation between China and SIVERS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and SIVERS SEMICONDUCTORS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIVERS SEMICONDUCTORS and China Railway 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 China Railway Group are associated (or correlated) with SIVERS SEMICONDUCTORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIVERS SEMICONDUCTORS has no effect on the direction of China Railway i.e., China Railway and SIVERS SEMICONDUCTORS go up and down completely randomly.

Pair Corralation between China Railway and SIVERS SEMICONDUCTORS

Assuming the 90 days horizon China Railway Group is expected to under-perform the SIVERS SEMICONDUCTORS. But the stock apears to be less risky and, when comparing its historical volatility, China Railway Group is 3.54 times less risky than SIVERS SEMICONDUCTORS. The stock trades about -0.04 of its potential returns per unit of risk. The SIVERS SEMICONDUCTORS AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  26.00  in SIVERS SEMICONDUCTORS AB on December 28, 2024 and sell it today you would earn a total of  12.00  from holding SIVERS SEMICONDUCTORS AB or generate 46.15% return on investment over 90 days.

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

China Railway Group  vs.  SIVERS SEMICONDUCTORS AB

China Railway Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Railway Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Railway is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SIVERS SEMICONDUCTORS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIVERS SEMICONDUCTORS AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SIVERS SEMICONDUCTORS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Railway and SIVERS SEMICONDUCTORS

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

The idea behind China Railway Group and SIVERS SEMICONDUCTORS AB 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.