Correlation Between Semiconductor Manufacturing and Nike

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

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

Diversification Opportunities for Semiconductor Manufacturing and Nike

-0.44

Correlation Coefficient

Semiconductor Manufacturing  Nike

Very good diversification

The 3 months correlation between Semiconductor and Nike is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing In and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 International are associated (or correlated) with Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Nike go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Nike

If you would invest  340.00  in Semiconductor Manufacturing International on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Semiconductor Manufacturing International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Semiconductor Manufacturing In  vs.  Nike Inc

Semiconductor Manufacturing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Semiconductor Manufacturing reported solid returns over the last few months and may actually be approaching a breakup point.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Semiconductor Manufacturing and Nike

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

The idea behind Semiconductor Manufacturing International and Nike Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.