Correlation Between WIN Semiconductors and Integrated Service

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

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

Diversification Opportunities for WIN Semiconductors and Integrated Service

0.82

Correlation Coefficient

WIN Semiconductors  Integrated Service

Very poor diversification

The 3 months correlation between WIN and Integrated is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Integrated Service Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Service 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 Integrated Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Service has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Integrated Service go up and down completely randomly.

Pair Corralation between WIN Semiconductors and Integrated Service

Assuming the 90 days trading horizon WIN Semiconductors is expected to generate 0.97 times more return on investment than Integrated Service. However, WIN Semiconductors is 1.03 times less risky than Integrated Service. It trades about -0.04 of its potential returns per unit of risk. Integrated Service Technology is currently generating about -0.05 per unit of risk. If you would invest  11,750  in WIN Semiconductors on December 2, 2024 and sell it today you would lose (650.00) from holding WIN Semiconductors or give up 5.53% of portfolio value over 90 days.

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

WIN Semiconductors  vs.  Integrated Service Technology

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.

Integrated Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integrated Service Technology 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.

Pair Trading with WIN Semiconductors and Integrated Service

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

The idea behind WIN Semiconductors and Integrated Service Technology 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.