Correlation Between China Development and RDC Semiconductor
Can any of the company-specific risk be diversified away by investing in both China Development and RDC Semiconductor 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 China Development and RDC Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Development Financial and RDC Semiconductor Co, you can compare the effects of market volatilities on China Development and RDC Semiconductor 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 China Development with a short position of RDC Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and RDC Semiconductor.
Diversification Opportunities for China Development and RDC Semiconductor
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and RDC is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and RDC Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RDC Semiconductor and China Development 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 China Development Financial are associated (or correlated) with RDC Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RDC Semiconductor has no effect on the direction of China Development i.e., China Development and RDC Semiconductor go up and down completely randomly.
Pair Corralation between China Development and RDC Semiconductor
Assuming the 90 days trading horizon China Development Financial is expected to generate 0.36 times more return on investment than RDC Semiconductor. However, China Development Financial is 2.78 times less risky than RDC Semiconductor. It trades about 0.11 of its potential returns per unit of risk. RDC Semiconductor Co is currently generating about -0.07 per unit of risk. If you would invest 1,600 in China Development Financial on August 28, 2024 and sell it today you would earn a total of 145.00 from holding China Development Financial or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Development Financial vs. RDC Semiconductor Co
Performance |
| Timeline |
| China Development |
| RDC Semiconductor |
China Development and RDC Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and RDC Semiconductor
The main advantage of trading using opposite China Development and RDC Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, RDC Semiconductor 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 RDC Semiconductor will offset losses from the drop in RDC Semiconductor's long position.| China Development vs. Cathay Financial Holding | China Development vs. Mega Financial Holding | China Development vs. CTBC Financial Holding | China Development vs. Fubon Financial Holding |
| RDC Semiconductor vs. Global Unichip Corp | RDC Semiconductor vs. Asmedia Technology | RDC Semiconductor vs. Unimicron Technology Corp | RDC Semiconductor vs. Novatek Microelectronics Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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