Correlation Between Shannon Semiconductor and Weihai Honglin
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By analyzing existing cross correlation between Shannon Semiconductor Technology and Weihai Honglin Electronic, you can compare the effects of market volatilities on Shannon Semiconductor and Weihai Honglin 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 Shannon Semiconductor with a short position of Weihai Honglin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shannon Semiconductor and Weihai Honglin.
Diversification Opportunities for Shannon Semiconductor and Weihai Honglin
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shannon and Weihai is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shannon Semiconductor Technolo and Weihai Honglin Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weihai Honglin Electronic and Shannon 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 Shannon Semiconductor Technology are associated (or correlated) with Weihai Honglin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weihai Honglin Electronic has no effect on the direction of Shannon Semiconductor i.e., Shannon Semiconductor and Weihai Honglin go up and down completely randomly.
Pair Corralation between Shannon Semiconductor and Weihai Honglin
Assuming the 90 days trading horizon Shannon Semiconductor Technology is expected to under-perform the Weihai Honglin. But the stock apears to be less risky and, when comparing its historical volatility, Shannon Semiconductor Technology is 1.65 times less risky than Weihai Honglin. The stock trades about -0.09 of its potential returns per unit of risk. The Weihai Honglin Electronic is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,385 in Weihai Honglin Electronic on October 25, 2024 and sell it today you would earn a total of 370.00 from holding Weihai Honglin Electronic or generate 26.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shannon Semiconductor Technolo vs. Weihai Honglin Electronic
Performance |
| Timeline |
| Shannon Semiconductor |
| Weihai Honglin Electronic |
Shannon Semiconductor and Weihai Honglin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shannon Semiconductor and Weihai Honglin
The main advantage of trading using opposite Shannon Semiconductor and Weihai Honglin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shannon Semiconductor position performs unexpectedly, Weihai Honglin 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 Weihai Honglin will offset losses from the drop in Weihai Honglin's long position.The idea behind Shannon Semiconductor Technology and Weihai Honglin Electronic 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.
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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 CEOs Directory module to screen CEOs from public companies around the world.
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