Correlation Between Semiconductor Manufacturing and Cultural Investment

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

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

Diversification Opportunities for Semiconductor Manufacturing and Cultural Investment

0.82

Correlation Coefficient

Semiconductor Manufacturing  Cultural Investment

Very poor diversification

The 3 months correlation between Semiconductor and Cultural is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Cultural Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cultural Investment and Semiconductor Manufacturing 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 Semiconductor Manufacturing Electronics are associated (or correlated) with Cultural Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cultural Investment has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Cultural Investment go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Cultural Investment

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to generate 1.35 times more return on investment than Cultural Investment. However, Semiconductor Manufacturing is 1.35 times more volatile than Cultural Investment Holdings. It trades about 0.25 of its potential returns per unit of risk. Cultural Investment Holdings is currently generating about 0.16 per unit of risk. If you would invest  338.00  in Semiconductor Manufacturing Electronics on September 13, 2024 and sell it today you would earn a total of  250.00  from holding Semiconductor Manufacturing Electronics or generate 73.96% return on investment over 90 days.

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

Semiconductor Manufacturing El  vs.  Cultural Investment Holdings

Semiconductor Manufacturing

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Semiconductor Manufacturing sustained solid returns over the last few months and may actually be approaching a breakup point.

Cultural Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cultural Investment Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cultural Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semiconductor Manufacturing and Cultural Investment

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

The idea behind Semiconductor Manufacturing Electronics and Cultural Investment Holdings 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.