Correlation Between Elite Semiconductor and Winstek Semiconductor

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

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

Diversification Opportunities for Elite Semiconductor and Winstek Semiconductor

0.48

Correlation Coefficient

Elite Semiconductor  Winstek Semiconductor

Very weak diversification

The 3 months correlation between Elite and Winstek is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Elite Semiconductor Memory and Winstek Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winstek Semiconductor and Elite Semiconductor 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 Elite Semiconductor Memory 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 Elite Semiconductor i.e., Elite Semiconductor and Winstek Semiconductor go up and down completely randomly.

Pair Corralation between Elite Semiconductor and Winstek Semiconductor

Assuming the 90 days trading horizon Elite Semiconductor Memory is expected to under-perform the Winstek Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Elite Semiconductor Memory is 1.39 times less risky than Winstek Semiconductor. The stock trades about -0.13 of its potential returns per unit of risk. The Winstek Semiconductor Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  10,800  in Winstek Semiconductor Co on September 14, 2024 and sell it today you would earn a total of  500.00  from holding Winstek Semiconductor Co or generate 4.63% return on investment over 90 days.

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

Elite Semiconductor Memory  vs.  Winstek Semiconductor Co

Elite Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elite Semiconductor Memory has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Winstek Semiconductor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Winstek Semiconductor Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Winstek 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 Elite Semiconductor and Winstek Semiconductor

The main advantage of trading using opposite Elite Semiconductor and Winstek Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Semiconductor 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 Elite Semiconductor Memory 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .