Correlation Between WIN Semiconductors and Gudeng Precision

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

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

Diversification Opportunities for WIN Semiconductors and Gudeng Precision

0.86

Correlation Coefficient

WIN Semiconductors  Gudeng Precision

Very poor diversification

The 3 months correlation between WIN and Gudeng is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Gudeng Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gudeng Precision Ind 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 Gudeng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gudeng Precision Ind has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Gudeng Precision go up and down completely randomly.

Pair Corralation between WIN Semiconductors and Gudeng Precision

Assuming the 90 days trading horizon WIN Semiconductors is expected to under-perform the Gudeng Precision. In addition to that, WIN Semiconductors is 1.0 times more volatile than Gudeng Precision Industrial. It trades about -0.12 of its total potential returns per unit of risk. Gudeng Precision Industrial is currently generating about -0.08 per unit of volatility. If you would invest  56,100  in Gudeng Precision Industrial on September 18, 2024 and sell it today you would lose (5,800) from holding Gudeng Precision Industrial or give up 10.34% 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.  Gudeng Precision Industrial

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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Gudeng Precision Ind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gudeng Precision Industrial 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 Gudeng Precision

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

The idea behind WIN Semiconductors and Gudeng Precision Industrial 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.