Correlation Between WIN Semiconductors and Xintec

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

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

Diversification Opportunities for WIN Semiconductors and Xintec

0.61

Correlation Coefficient

WIN Semiconductors  Xintec

Poor diversification

The 3 months correlation between WIN and Xintec is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec 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 Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Xintec go up and down completely randomly.

Pair Corralation between WIN Semiconductors and Xintec

Assuming the 90 days trading horizon WIN Semiconductors is expected to under-perform the Xintec. But the stock apears to be less risky and, when comparing its historical volatility, WIN Semiconductors is 1.44 times less risky than Xintec. The stock trades about -0.11 of its potential returns per unit of risk. The Xintec is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  19,000  in Xintec on September 18, 2024 and sell it today you would earn a total of  1,400  from holding Xintec or generate 7.37% return on investment over 90 days.

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

WIN Semiconductors  vs.  Xintec

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 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.

Xintec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xintec 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 Xintec

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

The idea behind WIN Semiconductors and Xintec 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.