Correlation Between WIN Semiconductors and Elite Material

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

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

Diversification Opportunities for WIN Semiconductors and Elite Material

-0.71

Correlation Coefficient

WIN Semiconductors  Elite Material

Pay attention - limited upside

The 3 months correlation between WIN and Elite is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material and WIN Semiconductors 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 WIN Semiconductors are associated (or correlated) with Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Elite Material go up and down completely randomly.

Pair Corralation between WIN Semiconductors and Elite Material

Assuming the 90 days trading horizon WIN Semiconductors is expected to under-perform the Elite Material. In addition to that, WIN Semiconductors is 1.03 times more volatile than Elite Material Co. It trades about -0.13 of its total potential returns per unit of risk. Elite Material Co is currently generating about -0.02 per unit of volatility. If you would invest  60,800  in Elite Material Co on October 22, 2024 and sell it today you would lose (1,000.00) from holding Elite Material Co or give up 1.64% of portfolio value over 90 days.

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

WIN Semiconductors  vs.  Elite Material Co

WIN Semiconductors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WIN Semiconductors 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Elite Material

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Material Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Elite Material showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WIN Semiconductors and Elite Material

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

The idea behind WIN Semiconductors and Elite Material 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.