Correlation Between StarPower Semiconductor and Shandong Ruifeng
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By analyzing existing cross correlation between StarPower Semiconductor and Shandong Ruifeng Chemical, you can compare the effects of market volatilities on StarPower Semiconductor and Shandong Ruifeng 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 Shandong Ruifeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of StarPower Semiconductor and Shandong Ruifeng.
Diversification Opportunities for StarPower Semiconductor and Shandong Ruifeng
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between StarPower and Shandong is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding StarPower Semiconductor and Shandong Ruifeng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Ruifeng Chemical 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 Shandong Ruifeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Ruifeng Chemical has no effect on the direction of StarPower Semiconductor i.e., StarPower Semiconductor and Shandong Ruifeng go up and down completely randomly.
Pair Corralation between StarPower Semiconductor and Shandong Ruifeng
Assuming the 90 days trading horizon StarPower Semiconductor is expected to under-perform the Shandong Ruifeng. But the stock apears to be less risky and, when comparing its historical volatility, StarPower Semiconductor is 1.1 times less risky than Shandong Ruifeng. The stock trades about -0.07 of its potential returns per unit of risk. The Shandong Ruifeng Chemical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 894.00 in Shandong Ruifeng Chemical on August 29, 2024 and sell it today you would earn a total of 245.00 from holding Shandong Ruifeng Chemical or generate 27.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
StarPower Semiconductor vs. Shandong Ruifeng Chemical
Performance |
| Timeline |
| StarPower Semiconductor |
| Shandong Ruifeng Chemical |
StarPower Semiconductor and Shandong Ruifeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with StarPower Semiconductor and Shandong Ruifeng
The main advantage of trading using opposite StarPower Semiconductor and Shandong Ruifeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StarPower Semiconductor position performs unexpectedly, Shandong Ruifeng 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 Shandong Ruifeng will offset losses from the drop in Shandong Ruifeng's long position.The idea behind StarPower Semiconductor and Shandong Ruifeng Chemical 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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