Correlation Between Globalfoundries and SemiLEDS
Can any of the company-specific risk be diversified away by investing in both Globalfoundries and SemiLEDS 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 Globalfoundries and SemiLEDS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and SemiLEDS, you can compare the effects of market volatilities on Globalfoundries and SemiLEDS 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 Globalfoundries with a short position of SemiLEDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and SemiLEDS.
Diversification Opportunities for Globalfoundries and SemiLEDS
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Globalfoundries and SemiLEDS is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS and Globalfoundries 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 Globalfoundries are associated (or correlated) with SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of Globalfoundries i.e., Globalfoundries and SemiLEDS go up and down completely randomly.
Pair Corralation between Globalfoundries and SemiLEDS
Considering the 90-day investment horizon Globalfoundries is expected to generate 0.53 times more return on investment than SemiLEDS. However, Globalfoundries is 1.89 times less risky than SemiLEDS. It trades about 0.13 of its potential returns per unit of risk. SemiLEDS is currently generating about 0.06 per unit of risk. If you would invest 4,024 in Globalfoundries on August 28, 2024 and sell it today you would earn a total of 471.00 from holding Globalfoundries or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. SemiLEDS
Performance |
| Timeline |
| Globalfoundries |
| SemiLEDS |
Globalfoundries and SemiLEDS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and SemiLEDS
The main advantage of trading using opposite Globalfoundries and SemiLEDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries position performs unexpectedly, SemiLEDS 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 SemiLEDS will offset losses from the drop in SemiLEDS's long position.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
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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