Correlation Between FDC International and WiseChip Semiconductor

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

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

Diversification Opportunities for FDC International and WiseChip Semiconductor

-0.08

Correlation Coefficient

FDC International  WiseChip Semiconductor

Good diversification

The 3 months correlation between FDC and WiseChip is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding FDC International Hotels and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip Semiconductor and FDC International 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 FDC International Hotels are associated (or correlated) with WiseChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseChip Semiconductor has no effect on the direction of FDC International i.e., FDC International and WiseChip Semiconductor go up and down completely randomly.

Pair Corralation between FDC International and WiseChip Semiconductor

Assuming the 90 days trading horizon FDC International Hotels is expected to generate 0.5 times more return on investment than WiseChip Semiconductor. However, FDC International Hotels is 1.99 times less risky than WiseChip Semiconductor. It trades about 0.11 of its potential returns per unit of risk. WiseChip Semiconductor is currently generating about -0.03 per unit of risk. If you would invest  5,760  in FDC International Hotels on September 13, 2024 and sell it today you would earn a total of  490.00  from holding FDC International Hotels or generate 8.51% return on investment over 90 days.

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

FDC International Hotels  vs.  WiseChip Semiconductor

FDC International Hotels

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FDC International Hotels are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, FDC International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WiseChip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WiseChip Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, WiseChip 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 FDC International and WiseChip Semiconductor

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

The idea behind FDC International Hotels and WiseChip Semiconductor 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.