Correlation Between Ambassador Hotel and Winstek Semiconductor

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

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

Diversification Opportunities for Ambassador Hotel and Winstek Semiconductor

0.11

Correlation Coefficient

Ambassador Hotel  Winstek Semiconductor

Average diversification

The 3 months correlation between Ambassador and Winstek is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ambassador Hotel and Winstek Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winstek Semiconductor and Ambassador Hotel 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 Ambassador Hotel are associated (or correlated) with Winstek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winstek Semiconductor has no effect on the direction of Ambassador Hotel i.e., Ambassador Hotel and Winstek Semiconductor go up and down completely randomly.

Pair Corralation between Ambassador Hotel and Winstek Semiconductor

Assuming the 90 days trading horizon Ambassador Hotel is expected to under-perform the Winstek Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Ambassador Hotel is 1.32 times less risky than Winstek Semiconductor. The stock trades about -0.09 of its potential returns per unit of risk. The Winstek Semiconductor Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  11,750  in Winstek Semiconductor Co on October 23, 2024 and sell it today you would lose (1,150) from holding Winstek Semiconductor Co or give up 9.79% of portfolio value over 90 days.

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

Ambassador Hotel  vs.  Winstek Semiconductor Co

Ambassador Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambassador Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Winstek Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winstek Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ambassador Hotel and Winstek Semiconductor

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

The idea behind Ambassador Hotel and Winstek 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.