Correlation Between Kuang Chi and Will Semiconductor

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

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

Diversification Opportunities for Kuang Chi and Will Semiconductor

-0.17

Correlation Coefficient

Kuang Chi  Will Semiconductor

Good diversification

The 3 months correlation between Kuang and Will is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kuang Chi Technologies and Will Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Will Semiconductor and Kuang Chi 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 Kuang Chi Technologies are associated (or correlated) with Will Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Will Semiconductor has no effect on the direction of Kuang Chi i.e., Kuang Chi and Will Semiconductor go up and down completely randomly.

Pair Corralation between Kuang Chi and Will Semiconductor

Assuming the 90 days trading horizon Kuang Chi Technologies is expected to under-perform the Will Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Kuang Chi Technologies is 1.01 times less risky than Will Semiconductor. The stock trades about -0.03 of its potential returns per unit of risk. The Will Semiconductor Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  10,129  in Will Semiconductor Co on December 25, 2024 and sell it today you would earn a total of  3,491  from holding Will Semiconductor Co or generate 34.47% return on investment over 90 days.

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

Kuang Chi Technologies  vs.  Will Semiconductor Co

Kuang Chi Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kuang Chi Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Will Semiconductor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Will Semiconductor Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Will Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kuang Chi and Will Semiconductor

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

The idea behind Kuang Chi Technologies and Will Semiconductor Co 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.