Correlation Between Semiconductor Manufacturing and Guangdong Fenghua
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By analyzing existing cross correlation between Semiconductor Manufacturing Electronics and Guangdong Fenghua Advanced, you can compare the effects of market volatilities on Semiconductor Manufacturing and Guangdong Fenghua 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 Semiconductor Manufacturing with a short position of Guangdong Fenghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and Guangdong Fenghua.
Diversification Opportunities for Semiconductor Manufacturing and Guangdong Fenghua
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Semiconductor and Guangdong is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Guangdong Fenghua Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Fenghua and Semiconductor Manufacturing 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 Semiconductor Manufacturing Electronics are associated (or correlated) with Guangdong Fenghua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Fenghua has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Guangdong Fenghua go up and down completely randomly.
Pair Corralation between Semiconductor Manufacturing and Guangdong Fenghua
Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to generate 1.52 times more return on investment than Guangdong Fenghua. However, Semiconductor Manufacturing is 1.52 times more volatile than Guangdong Fenghua Advanced. It trades about 0.25 of its potential returns per unit of risk. Guangdong Fenghua Advanced is currently generating about 0.12 per unit of risk. If you would invest 338.00 in Semiconductor Manufacturing Electronics on September 12, 2024 and sell it today you would earn a total of 254.00 from holding Semiconductor Manufacturing Electronics or generate 75.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.28% |
| Values | Daily Returns |
Semiconductor Manufacturing El vs. Guangdong Fenghua Advanced
Performance |
| Timeline |
| Semiconductor Manufacturing |
| Guangdong Fenghua |
Semiconductor Manufacturing and Guangdong Fenghua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semiconductor Manufacturing and Guangdong Fenghua
The main advantage of trading using opposite Semiconductor Manufacturing and Guangdong Fenghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Manufacturing position performs unexpectedly, Guangdong Fenghua 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 Guangdong Fenghua will offset losses from the drop in Guangdong Fenghua's long position.The idea behind Semiconductor Manufacturing Electronics and Guangdong Fenghua Advanced 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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