Correlation Between TOREX SEMICONDUCTOR and Hua Hong
Can any of the company-specific risk be diversified away by investing in both TOREX SEMICONDUCTOR and Hua Hong 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 TOREX SEMICONDUCTOR and Hua Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOREX SEMICONDUCTOR LTD and Hua Hong Semiconductor, you can compare the effects of market volatilities on TOREX SEMICONDUCTOR and Hua Hong 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 TOREX SEMICONDUCTOR with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOREX SEMICONDUCTOR and Hua Hong.
Diversification Opportunities for TOREX SEMICONDUCTOR and Hua Hong
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TOREX and Hua is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TOREX SEMICONDUCTOR LTD and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and TOREX 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 TOREX SEMICONDUCTOR LTD are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of TOREX SEMICONDUCTOR i.e., TOREX SEMICONDUCTOR and Hua Hong go up and down completely randomly.
Pair Corralation between TOREX SEMICONDUCTOR and Hua Hong
Assuming the 90 days horizon TOREX SEMICONDUCTOR LTD is expected to under-perform the Hua Hong. But the stock apears to be less risky and, when comparing its historical volatility, TOREX SEMICONDUCTOR LTD is 1.43 times less risky than Hua Hong. The stock trades about -0.06 of its potential returns per unit of risk. The Hua Hong Semiconductor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 248.00 in Hua Hong Semiconductor on October 9, 2024 and sell it today you would earn a total of 0.00 from holding Hua Hong Semiconductor or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOREX SEMICONDUCTOR LTD vs. Hua Hong Semiconductor
Performance |
| Timeline |
| TOREX SEMICONDUCTOR LTD |
| Hua Hong Semiconductor |
TOREX SEMICONDUCTOR and Hua Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOREX SEMICONDUCTOR and Hua Hong
The main advantage of trading using opposite TOREX SEMICONDUCTOR and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOREX SEMICONDUCTOR position performs unexpectedly, Hua Hong 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 Hua Hong will offset losses from the drop in Hua Hong's long position.| TOREX SEMICONDUCTOR vs. Taiwan Semiconductor Manufacturing | TOREX SEMICONDUCTOR vs. QUALCOMM Incorporated | TOREX SEMICONDUCTOR vs. Advanced Micro Devices | TOREX SEMICONDUCTOR vs. Advanced Micro Devices |
| Hua Hong vs. Coor Service Management | Hua Hong vs. VULCAN MATERIALS | Hua Hong vs. Sims Metal Management | Hua Hong vs. SANOK RUBBER ZY |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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