Correlation Between Shanghai Phichem and StarPower Semiconductor
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By analyzing existing cross correlation between Shanghai Phichem Material and StarPower Semiconductor, you can compare the effects of market volatilities on Shanghai Phichem and StarPower 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 Shanghai Phichem with a short position of StarPower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Phichem and StarPower Semiconductor.
Diversification Opportunities for Shanghai Phichem and StarPower Semiconductor
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and StarPower is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Phichem Material and StarPower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StarPower Semiconductor and Shanghai Phichem 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 Shanghai Phichem Material are associated (or correlated) with StarPower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StarPower Semiconductor has no effect on the direction of Shanghai Phichem i.e., Shanghai Phichem and StarPower Semiconductor go up and down completely randomly.
Pair Corralation between Shanghai Phichem and StarPower Semiconductor
Assuming the 90 days trading horizon Shanghai Phichem Material is expected to generate 1.06 times more return on investment than StarPower Semiconductor. However, Shanghai Phichem is 1.06 times more volatile than StarPower Semiconductor. It trades about 0.26 of its potential returns per unit of risk. StarPower Semiconductor is currently generating about 0.04 per unit of risk. If you would invest 1,470 in Shanghai Phichem Material on November 7, 2024 and sell it today you would earn a total of 115.00 from holding Shanghai Phichem Material or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Phichem Material vs. StarPower Semiconductor
Performance |
| Timeline |
| Shanghai Phichem Material |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| StarPower Semiconductor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shanghai Phichem and StarPower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Phichem and StarPower Semiconductor
The main advantage of trading using opposite Shanghai Phichem and StarPower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Phichem position performs unexpectedly, StarPower 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 StarPower Semiconductor will offset losses from the drop in StarPower Semiconductor's long position.The idea behind Shanghai Phichem Material and StarPower Semiconductor 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.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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