Correlation Between SIVERS SEMICONDUCTORS and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both SIVERS SEMICONDUCTORS and CHINA HUARONG 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 SIVERS SEMICONDUCTORS and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIVERS SEMICONDUCTORS AB and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on SIVERS SEMICONDUCTORS and CHINA HUARONG 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 SIVERS SEMICONDUCTORS with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIVERS SEMICONDUCTORS and CHINA HUARONG.
Diversification Opportunities for SIVERS SEMICONDUCTORS and CHINA HUARONG
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIVERS and CHINA is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SIVERS SEMICONDUCTORS AB and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB are associated (or correlated) with CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of SIVERS SEMICONDUCTORS i.e., SIVERS SEMICONDUCTORS and CHINA HUARONG go up and down completely randomly.
Pair Corralation between SIVERS SEMICONDUCTORS and CHINA HUARONG
Assuming the 90 days horizon SIVERS SEMICONDUCTORS is expected to generate 440.01 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, SIVERS SEMICONDUCTORS AB is 6.55 times less risky than CHINA HUARONG. It trades about 0.0 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.05 in CHINA HUARONG ENERHD 50 on September 1, 2024 and sell it today you would earn a total of 0.10 from holding CHINA HUARONG ENERHD 50 or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIVERS SEMICONDUCTORS AB vs. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| SIVERS SEMICONDUCTORS |
| CHINA HUARONG ENERHD |
SIVERS SEMICONDUCTORS and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIVERS SEMICONDUCTORS and CHINA HUARONG
The main advantage of trading using opposite SIVERS SEMICONDUCTORS and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIVERS SEMICONDUCTORS position performs unexpectedly, CHINA HUARONG 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 CHINA HUARONG will offset losses from the drop in CHINA HUARONG's long position.The idea behind SIVERS SEMICONDUCTORS AB and CHINA HUARONG ENERHD 50 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.| CHINA HUARONG vs. United Breweries Co | CHINA HUARONG vs. Monster Beverage Corp | CHINA HUARONG vs. LIFEWAY FOODS | CHINA HUARONG vs. National Beverage 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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