Correlation Between WT Microelectronics and Kingstate Electronics

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

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

Diversification Opportunities for WT Microelectronics and Kingstate Electronics

0.89

Correlation Coefficient

WT Microelectronics  Kingstate Electronics

Very poor diversification

The 3 months correlation between 3036A and Kingstate is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding WT Microelectronics Co and Kingstate Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstate Electronics and WT Microelectronics 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 WT Microelectronics Co are associated (or correlated) with Kingstate Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstate Electronics has no effect on the direction of WT Microelectronics i.e., WT Microelectronics and Kingstate Electronics go up and down completely randomly.

Pair Corralation between WT Microelectronics and Kingstate Electronics

Assuming the 90 days trading horizon WT Microelectronics Co is expected to generate 0.17 times more return on investment than Kingstate Electronics. However, WT Microelectronics Co is 5.81 times less risky than Kingstate Electronics. It trades about 0.14 of its potential returns per unit of risk. Kingstate Electronics is currently generating about 0.02 per unit of risk. If you would invest  4,975  in WT Microelectronics Co on December 29, 2024 and sell it today you would earn a total of  55.00  from holding WT Microelectronics Co or generate 1.11% return on investment over 90 days.

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

WT Microelectronics Co  vs.  Kingstate Electronics

WT Microelectronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WT Microelectronics Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WT Microelectronics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Kingstate Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingstate Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kingstate Electronics 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 WT Microelectronics and Kingstate Electronics

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

The idea behind WT Microelectronics Co and Kingstate Electronics 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.