Correlation Between Orient Semiconductor and Lingsen Precision
Can any of the company-specific risk be diversified away by investing in both Orient Semiconductor and Lingsen Precision 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 Orient Semiconductor and Lingsen Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Semiconductor Electronics and Lingsen Precision Industries, you can compare the effects of market volatilities on Orient Semiconductor and Lingsen Precision 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 Orient Semiconductor with a short position of Lingsen Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Semiconductor and Lingsen Precision.
Diversification Opportunities for Orient Semiconductor and Lingsen Precision
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Orient and Lingsen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Orient Semiconductor Electroni and Lingsen Precision Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingsen Precision and Orient 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 Orient Semiconductor Electronics are associated (or correlated) with Lingsen Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lingsen Precision has no effect on the direction of Orient Semiconductor i.e., Orient Semiconductor and Lingsen Precision go up and down completely randomly.
Pair Corralation between Orient Semiconductor and Lingsen Precision
Assuming the 90 days trading horizon Orient Semiconductor Electronics is expected to generate 1.24 times more return on investment than Lingsen Precision. However, Orient Semiconductor is 1.24 times more volatile than Lingsen Precision Industries. It trades about 0.05 of its potential returns per unit of risk. Lingsen Precision Industries is currently generating about 0.02 per unit of risk. If you would invest 2,095 in Orient Semiconductor Electronics on November 28, 2024 and sell it today you would earn a total of 1,645 from holding Orient Semiconductor Electronics or generate 78.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Orient Semiconductor Electroni vs. Lingsen Precision Industries
Performance |
| Timeline |
| Orient Semiconductor |
| Lingsen Precision |
Orient Semiconductor and Lingsen Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Semiconductor and Lingsen Precision
The main advantage of trading using opposite Orient Semiconductor and Lingsen Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Semiconductor position performs unexpectedly, Lingsen Precision 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 Lingsen Precision will offset losses from the drop in Lingsen Precision's long position.| Orient Semiconductor vs. Sunplus Technology Co | Orient Semiconductor vs. Silicon Integrated Systems | Orient Semiconductor vs. Realtek Semiconductor Corp | Orient Semiconductor vs. Elan Microelectronics Corp |
| Lingsen Precision vs. Yi Jinn Industrial | Lingsen Precision vs. Holiday Entertainment Co | Lingsen Precision vs. Sports Gear Co | Lingsen Precision vs. General Plastic Industrial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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