Correlation Between Semiconductor Manufacturing and King Strong

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Can any of the company-specific risk be diversified away by investing in both Semiconductor Manufacturing and King Strong 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 Semiconductor Manufacturing and King Strong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semiconductor Manufacturing Electronics and King Strong New Material, you can compare the effects of market volatilities on Semiconductor Manufacturing and King Strong 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 King Strong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and King Strong.

Diversification Opportunities for Semiconductor Manufacturing and King Strong

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Semiconductor and King is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and King Strong New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Strong New 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 King Strong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Strong New has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and King Strong go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and King Strong

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to under-perform the King Strong. But the stock apears to be less risky and, when comparing its historical volatility, Semiconductor Manufacturing Electronics is 1.39 times less risky than King Strong. The stock trades about -0.32 of its potential returns per unit of risk. The King Strong New Material is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  2,380  in King Strong New Material on October 30, 2024 and sell it today you would lose (430.00) from holding King Strong New Material or give up 18.07% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Semiconductor Manufacturing El  vs.  King Strong New Material

 Performance 
       Timeline  
Semiconductor Manufacturing 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Semiconductor Manufacturing Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Semiconductor Manufacturing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
King Strong New 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days King Strong New Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, King Strong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Semiconductor Manufacturing and King Strong Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Semiconductor Manufacturing and King Strong

The main advantage of trading using opposite Semiconductor Manufacturing and King Strong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Manufacturing position performs unexpectedly, King Strong 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 King Strong will offset losses from the drop in King Strong's long position.
The idea behind Semiconductor Manufacturing Electronics and King Strong New Material 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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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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