Correlation Between Episil Precision and WIN Semiconductors

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

By analyzing existing cross correlation between Episil Precision and WIN Semiconductors, you can compare the effects of market volatilities on Episil Precision and WIN Semiconductors 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 Episil Precision with a short position of WIN Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Episil Precision and WIN Semiconductors.

Diversification Opportunities for Episil Precision and WIN Semiconductors

0.51

Correlation Coefficient

Episil Precision  WIN Semiconductors

Very weak diversification

The 3 months correlation between Episil and WIN is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Episil Precision and WIN Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN Semiconductors and Episil Precision 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 Episil Precision are associated (or correlated) with WIN Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIN Semiconductors has no effect on the direction of Episil Precision i.e., Episil Precision and WIN Semiconductors go up and down completely randomly.

Pair Corralation between Episil Precision and WIN Semiconductors

Assuming the 90 days trading horizon Episil Precision is expected to under-perform the WIN Semiconductors. In addition to that, Episil Precision is 1.08 times more volatile than WIN Semiconductors. It trades about -0.04 of its total potential returns per unit of risk. WIN Semiconductors is currently generating about 0.03 per unit of volatility. If you would invest  11,050  in WIN Semiconductors on December 21, 2024 and sell it today you would earn a total of  250.00  from holding WIN Semiconductors or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.21%
Values	Daily Returns

Episil Precision  vs.  WIN Semiconductors

Episil Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Episil Precision 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.

WIN Semiconductors

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIN Semiconductors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, WIN Semiconductors 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 Episil Precision and WIN Semiconductors

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

The idea behind Episil Precision and WIN Semiconductors 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.