Correlation Between WIN Semiconductors and Laster Tech

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

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

Diversification Opportunities for WIN Semiconductors and Laster Tech

0.48

Correlation Coefficient

WIN Semiconductors  Laster Tech

Very weak diversification

The 3 months correlation between WIN and Laster is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Laster Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laster Tech Corp 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 Laster Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laster Tech Corp has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Laster Tech go up and down completely randomly.

Pair Corralation between WIN Semiconductors and Laster Tech

Assuming the 90 days trading horizon WIN Semiconductors is expected to generate 1.99 times more return on investment than Laster Tech. However, WIN Semiconductors is 1.99 times more volatile than Laster Tech Corp. It trades about -0.03 of its potential returns per unit of risk. Laster Tech Corp is currently generating about -0.12 per unit of risk. If you would invest  11,400  in WIN Semiconductors on December 29, 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 Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

WIN Semiconductors  vs.  Laster Tech Corp

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.

Laster Tech Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laster Tech Corp 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 Laster Tech

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

The idea behind WIN Semiconductors and Laster Tech Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.