Correlation Between Lingsen Precision and Orient Semiconductor

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

By analyzing existing cross correlation between Lingsen Precision Industries and Orient Semiconductor Electronics, you can compare the effects of market volatilities on Lingsen Precision and Orient 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 Lingsen Precision with a short position of Orient Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lingsen Precision and Orient Semiconductor.

Diversification Opportunities for Lingsen Precision and Orient Semiconductor

0.74

Correlation Coefficient

Lingsen Precision  Orient Semiconductor

Poor diversification

The 3 months correlation between Lingsen and Orient is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Lingsen Precision Industries and Orient Semiconductor Electroni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Semiconductor and Lingsen Precision 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 Lingsen Precision Industries are associated (or correlated) with Orient Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Semiconductor has no effect on the direction of Lingsen Precision i.e., Lingsen Precision and Orient Semiconductor go up and down completely randomly.

Pair Corralation between Lingsen Precision and Orient Semiconductor

Assuming the 90 days trading horizon Lingsen Precision Industries is expected to under-perform the Orient Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Lingsen Precision Industries is 1.28 times less risky than Orient Semiconductor. The stock trades about -0.3 of its potential returns per unit of risk. The Orient Semiconductor Electronics is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  3,715  in Orient Semiconductor Electronics on September 4, 2024 and sell it today you would lose (210.00) from holding Orient Semiconductor Electronics or give up 5.65% of portfolio value over 90 days.

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

Lingsen Precision Industries  vs.  Orient Semiconductor Electroni

Lingsen Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lingsen Precision Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lingsen Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Orient Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orient Semiconductor Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Orient Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Lingsen Precision and Orient Semiconductor

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

The idea behind Lingsen Precision Industries and Orient Semiconductor Electronics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.