Correlation Between SemiLEDS and BitFuFu

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

By analyzing existing cross correlation between SemiLEDS and BitFuFu Class A, you can compare the effects of market volatilities on SemiLEDS and BitFuFu 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 SemiLEDS with a short position of BitFuFu. Check out your portfolio center. Please also check ongoing floating volatility patterns of SemiLEDS and BitFuFu.

Diversification Opportunities for SemiLEDS and BitFuFu

0.52

Correlation Coefficient

SemiLEDS  BitFuFu

Very weak diversification

The 3 months correlation between SemiLEDS and BitFuFu is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SemiLEDS and BitFuFu Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitFuFu Class A and SemiLEDS 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 SemiLEDS are associated (or correlated) with BitFuFu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitFuFu Class A has no effect on the direction of SemiLEDS i.e., SemiLEDS and BitFuFu go up and down completely randomly.

Pair Corralation between SemiLEDS and BitFuFu

Given the investment horizon of 90 days SemiLEDS is expected to generate 1.21 times more return on investment than BitFuFu. However, SemiLEDS is 1.21 times more volatile than BitFuFu Class A. It trades about 0.09 of its potential returns per unit of risk. BitFuFu Class A is currently generating about 0.11 per unit of risk. If you would invest  111.00  in SemiLEDS on October 6, 2024 and sell it today you would earn a total of  23.00  from holding SemiLEDS or generate 20.72% return on investment over 90 days.

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

SemiLEDS  vs.  BitFuFu Class A

SemiLEDS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SemiLEDS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, SemiLEDS unveiled solid returns over the last few months and may actually be approaching a breakup point.

BitFuFu Class A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BitFuFu Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, BitFuFu unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SemiLEDS and BitFuFu

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

The idea behind SemiLEDS and BitFuFu Class A 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.