Correlation Between WIN Semiconductors and LandMark Optoelectronics

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

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

Diversification Opportunities for WIN Semiconductors and LandMark Optoelectronics

-0.34

Correlation Coefficient

WIN Semiconductors  LandMark Optoelectronics

Very good diversification

The 3 months correlation between WIN and LandMark is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and LandMark Optoelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LandMark Optoelectronics 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 LandMark Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LandMark Optoelectronics has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and LandMark Optoelectronics go up and down completely randomly.

Pair Corralation between WIN Semiconductors and LandMark Optoelectronics

Assuming the 90 days trading horizon WIN Semiconductors is expected to generate 0.54 times more return on investment than LandMark Optoelectronics. However, WIN Semiconductors is 1.86 times less risky than LandMark Optoelectronics. It trades about -0.03 of its potential returns per unit of risk. LandMark Optoelectronics is currently generating about -0.04 per unit of risk. If you would invest  11,400  in WIN Semiconductors on December 30, 2024 and sell it today you would lose (700.00) from holding WIN Semiconductors or give up 6.14% of portfolio value over 90 days.

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

WIN Semiconductors  vs.  LandMark Optoelectronics

WIN Semiconductors

Risk-Adjusted Performance

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 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.

LandMark Optoelectronics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with WIN Semiconductors and LandMark Optoelectronics

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

The idea behind WIN Semiconductors and LandMark Optoelectronics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.