Correlation Between Niko Semiconductor and Lingsen Precision
Can any of the company-specific risk be diversified away by investing in both Niko 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 Niko 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 Niko Semiconductor Co and Lingsen Precision Industries, you can compare the effects of market volatilities on Niko 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 Niko Semiconductor with a short position of Lingsen Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niko Semiconductor and Lingsen Precision.
Diversification Opportunities for Niko Semiconductor and Lingsen Precision
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Niko and Lingsen is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Niko Semiconductor Co and Lingsen Precision Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingsen Precision and Niko 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 Niko Semiconductor Co 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 Niko Semiconductor i.e., Niko Semiconductor and Lingsen Precision go up and down completely randomly.
Pair Corralation between Niko Semiconductor and Lingsen Precision
Assuming the 90 days trading horizon Niko Semiconductor Co is expected to generate 1.08 times more return on investment than Lingsen Precision. However, Niko Semiconductor is 1.08 times more volatile than Lingsen Precision Industries. It trades about -0.08 of its potential returns per unit of risk. Lingsen Precision Industries is currently generating about -0.14 per unit of risk. If you would invest 5,030 in Niko Semiconductor Co on November 6, 2024 and sell it today you would lose (490.00) from holding Niko Semiconductor Co or give up 9.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Niko Semiconductor Co vs. Lingsen Precision Industries
Performance |
| Timeline |
| Niko Semiconductor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lingsen Precision |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Niko Semiconductor and Lingsen Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Niko Semiconductor and Lingsen Precision
The main advantage of trading using opposite Niko Semiconductor and Lingsen Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niko 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.The idea behind Niko Semiconductor Co and Lingsen Precision Industries 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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