Correlation Between ON SEMICONDUCTOR and Hongkong

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

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

Diversification Opportunities for ON SEMICONDUCTOR and Hongkong

-0.35

Correlation Coefficient

ON SEMICONDUCTOR  Hongkong

Very good diversification

The 3 months correlation between XS4 and Hongkong is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR and The Hongkong and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hongkong and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR are associated (or correlated) with Hongkong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hongkong has no effect on the direction of ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and Hongkong go up and down completely randomly.

Pair Corralation between ON SEMICONDUCTOR and Hongkong

Assuming the 90 days trading horizon ON SEMICONDUCTOR is expected to under-perform the Hongkong. But the stock apears to be less risky and, when comparing its historical volatility, ON SEMICONDUCTOR is 1.0 times less risky than Hongkong. The stock trades about -0.01 of its potential returns per unit of risk. The The Hongkong and is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  91.00  in The Hongkong and on October 26, 2024 and sell it today you would lose (20.00) from holding The Hongkong and or give up 21.98% of portfolio value over 90 days.

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

ON SEMICONDUCTOR  vs.  The Hongkong and

ON SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON SEMICONDUCTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

The Hongkong

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hongkong and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hongkong may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ON SEMICONDUCTOR and Hongkong

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

The idea behind ON SEMICONDUCTOR and The Hongkong and 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.