Correlation Between Semiconductor Manufacturing and Focus Media
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By analyzing existing cross correlation between Semiconductor Manufacturing Intl and Focus Media Information, you can compare the effects of market volatilities on Semiconductor Manufacturing and Focus Media 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 Focus Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and Focus Media.
Diversification Opportunities for Semiconductor Manufacturing and Focus Media
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Semiconductor and Focus is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing In and Focus Media Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Media Information 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 Intl are associated (or correlated) with Focus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Media Information has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Focus Media go up and down completely randomly.
Pair Corralation between Semiconductor Manufacturing and Focus Media
Assuming the 90 days trading horizon Semiconductor Manufacturing Intl is expected to generate 2.36 times more return on investment than Focus Media. However, Semiconductor Manufacturing is 2.36 times more volatile than Focus Media Information. It trades about 0.07 of its potential returns per unit of risk. Focus Media Information is currently generating about -0.15 per unit of risk. If you would invest 8,681 in Semiconductor Manufacturing Intl on September 3, 2024 and sell it today you would earn a total of 329.00 from holding Semiconductor Manufacturing Intl or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semiconductor Manufacturing In vs. Focus Media Information
Performance |
| Timeline |
| Semiconductor Manufacturing |
| Focus Media Information |
Semiconductor Manufacturing and Focus Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semiconductor Manufacturing and Focus Media
The main advantage of trading using opposite Semiconductor Manufacturing and Focus Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Manufacturing position performs unexpectedly, Focus Media 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 Focus Media will offset losses from the drop in Focus Media's long position.The idea behind Semiconductor Manufacturing Intl and Focus Media Information 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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