Correlation Between Semiconductor Manufacturing and Commerzbank

Can any of the company-specific risk be diversified away by investing in both Semiconductor Manufacturing and Commerzbank 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 Commerzbank 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 Commerzbank AG, you can compare the effects of market volatilities on Semiconductor Manufacturing and Commerzbank 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 Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and Commerzbank.

Diversification Opportunities for Semiconductor Manufacturing and Commerzbank

-0.32

Correlation Coefficient

Semiconductor Manufacturing  Commerzbank

Very good diversification

The 3 months correlation between Semiconductor and Commerzbank is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing In and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Commerzbank go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Commerzbank

If you would invest  1,490  in Commerzbank AG on October 11, 2024 and sell it today you would earn a total of  90.00  from holding Commerzbank AG or generate 6.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Semiconductor Manufacturing In  vs.  Commerzbank AG

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.

Commerzbank AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commerzbank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Commerzbank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Semiconductor Manufacturing and Commerzbank

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

The idea behind Semiconductor Manufacturing International and Commerzbank AG 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.