Correlation Between StarPower Semiconductor and LianChuang Electronic
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By analyzing existing cross correlation between StarPower Semiconductor and LianChuang Electronic Technology, you can compare the effects of market volatilities on StarPower Semiconductor and LianChuang Electronic 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 StarPower Semiconductor with a short position of LianChuang Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of StarPower Semiconductor and LianChuang Electronic.
Diversification Opportunities for StarPower Semiconductor and LianChuang Electronic
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between StarPower and LianChuang is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding StarPower Semiconductor and LianChuang Electronic Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LianChuang Electronic and StarPower 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 StarPower Semiconductor are associated (or correlated) with LianChuang Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LianChuang Electronic has no effect on the direction of StarPower Semiconductor i.e., StarPower Semiconductor and LianChuang Electronic go up and down completely randomly.
Pair Corralation between StarPower Semiconductor and LianChuang Electronic
Assuming the 90 days trading horizon StarPower Semiconductor is expected to under-perform the LianChuang Electronic. But the stock apears to be less risky and, when comparing its historical volatility, StarPower Semiconductor is 1.1 times less risky than LianChuang Electronic. The stock trades about -0.07 of its potential returns per unit of risk. The LianChuang Electronic Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,381 in LianChuang Electronic Technology on October 30, 2024 and sell it today you would lose (497.00) from holding LianChuang Electronic Technology or give up 35.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
StarPower Semiconductor vs. LianChuang Electronic Technolo
Performance |
| Timeline |
| StarPower Semiconductor |
| LianChuang Electronic |
StarPower Semiconductor and LianChuang Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with StarPower Semiconductor and LianChuang Electronic
The main advantage of trading using opposite StarPower Semiconductor and LianChuang Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StarPower Semiconductor position performs unexpectedly, LianChuang Electronic 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 LianChuang Electronic will offset losses from the drop in LianChuang Electronic's long position.The idea behind StarPower Semiconductor and LianChuang Electronic Technology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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