Correlation Between ITM Semiconductor and SBI Investment

Can any of the company-specific risk be diversified away by investing in both ITM Semiconductor and SBI Investment 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 ITM Semiconductor and SBI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ITM Semiconductor Co and SBI Investment KOREA, you can compare the effects of market volatilities on ITM Semiconductor and SBI Investment 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 ITM Semiconductor with a short position of SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Semiconductor and SBI Investment.

Diversification Opportunities for ITM Semiconductor and SBI Investment

-0.23

Correlation Coefficient

ITM Semiconductor  SBI Investment

Very good diversification

The 3 months correlation between ITM and SBI is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ITM Semiconductor Co and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA and ITM 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 ITM Semiconductor Co are associated (or correlated) with SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of ITM Semiconductor i.e., ITM Semiconductor and SBI Investment go up and down completely randomly.

Pair Corralation between ITM Semiconductor and SBI Investment

Assuming the 90 days trading horizon ITM Semiconductor Co is expected to under-perform the SBI Investment. But the stock apears to be less risky and, when comparing its historical volatility, ITM Semiconductor Co is 1.84 times less risky than SBI Investment. The stock trades about -0.35 of its potential returns per unit of risk. The SBI Investment KOREA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  75,000  in SBI Investment KOREA on September 15, 2024 and sell it today you would earn a total of  5,000  from holding SBI Investment KOREA or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ITM Semiconductor Co  vs.  SBI Investment KOREA

ITM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITM Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SBI Investment KOREA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Investment KOREA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SBI Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ITM Semiconductor and SBI Investment

The main advantage of trading using opposite ITM Semiconductor and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITM Semiconductor position performs unexpectedly, SBI Investment 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 SBI Investment will offset losses from the drop in SBI Investment's long position.

The idea behind ITM Semiconductor Co and SBI Investment KOREA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.