Correlation Between Microelectronics and StShine Optical
Can any of the company-specific risk be diversified away by investing in both Microelectronics and StShine Optical 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 Microelectronics and StShine Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microelectronics Technology and StShine Optical Co, you can compare the effects of market volatilities on Microelectronics and StShine Optical 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 Microelectronics with a short position of StShine Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microelectronics and StShine Optical.
Diversification Opportunities for Microelectronics and StShine Optical
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microelectronics and StShine is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microelectronics Technology and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical and Microelectronics 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 Microelectronics Technology are associated (or correlated) with StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of Microelectronics i.e., Microelectronics and StShine Optical go up and down completely randomly.
Pair Corralation between Microelectronics and StShine Optical
Assuming the 90 days trading horizon Microelectronics Technology is expected to under-perform the StShine Optical. In addition to that, Microelectronics is 1.72 times more volatile than StShine Optical Co. It trades about -0.02 of its total potential returns per unit of risk. StShine Optical Co is currently generating about 0.03 per unit of volatility. If you would invest 18,652 in StShine Optical Co on September 12, 2024 and sell it today you would earn a total of 2,348 from holding StShine Optical Co or generate 12.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microelectronics Technology vs. StShine Optical Co
Performance |
| Timeline |
| Microelectronics Tec |
| StShine Optical |
Microelectronics and StShine Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microelectronics and StShine Optical
The main advantage of trading using opposite Microelectronics and StShine Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microelectronics position performs unexpectedly, StShine Optical 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 StShine Optical will offset losses from the drop in StShine Optical's long position.| Microelectronics vs. AU Optronics | Microelectronics vs. Innolux Corp | Microelectronics vs. Ruentex Development Co | Microelectronics vs. WiseChip Semiconductor |
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Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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