Correlation Between China Datang and ON SEMICONDUCTOR
Can any of the company-specific risk be diversified away by investing in both China Datang and ON SEMICONDUCTOR 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 China Datang and ON SEMICONDUCTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and ON SEMICONDUCTOR, you can compare the effects of market volatilities on China Datang and ON SEMICONDUCTOR 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 China Datang with a short position of ON SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Datang and ON SEMICONDUCTOR.
Diversification Opportunities for China Datang and ON SEMICONDUCTOR
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and XS4 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding China Datang and ON SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON SEMICONDUCTOR and China Datang 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 China Datang are associated (or correlated) with ON SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON SEMICONDUCTOR has no effect on the direction of China Datang i.e., China Datang and ON SEMICONDUCTOR go up and down completely randomly.
Pair Corralation between China Datang and ON SEMICONDUCTOR
Assuming the 90 days horizon China Datang is expected to generate 0.76 times more return on investment than ON SEMICONDUCTOR. However, China Datang is 1.31 times less risky than ON SEMICONDUCTOR. It trades about 0.01 of its potential returns per unit of risk. ON SEMICONDUCTOR is currently generating about -0.3 per unit of risk. If you would invest 25.00 in China Datang on October 31, 2024 and sell it today you would earn a total of 0.00 from holding China Datang or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
China Datang vs. ON SEMICONDUCTOR
Performance |
| Timeline |
| China Datang |
| ON SEMICONDUCTOR |
China Datang and ON SEMICONDUCTOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Datang and ON SEMICONDUCTOR
The main advantage of trading using opposite China Datang and ON SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Datang position performs unexpectedly, ON SEMICONDUCTOR 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 ON SEMICONDUCTOR will offset losses from the drop in ON SEMICONDUCTOR's long position.| China Datang vs. Semiconductor Manufacturing International | China Datang vs. Magnachip Semiconductor | China Datang vs. Olympic Steel | China Datang vs. Elmos Semiconductor SE |
| ON SEMICONDUCTOR vs. Datadog | ON SEMICONDUCTOR vs. Taiwan Semiconductor Manufacturing | ON SEMICONDUCTOR vs. Alliance Data Systems | ON SEMICONDUCTOR vs. Teradata Corp |
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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