Correlation Between WIN Semiconductors and CVC Technologies

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

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

Diversification Opportunities for WIN Semiconductors and CVC Technologies

-0.51

Correlation Coefficient

WIN Semiconductors  CVC Technologies

Excellent diversification

The 3 months correlation between WIN and CVC is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and CVC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Technologies 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 CVC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Technologies has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and CVC Technologies go up and down completely randomly.

Pair Corralation between WIN Semiconductors and CVC Technologies

Assuming the 90 days trading horizon WIN Semiconductors is expected to under-perform the CVC Technologies. But the stock apears to be less risky and, when comparing its historical volatility, WIN Semiconductors is 1.37 times less risky than CVC Technologies. The stock trades about -0.19 of its potential returns per unit of risk. The CVC Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,120  in CVC Technologies on October 27, 2024 and sell it today you would earn a total of  65.00  from holding CVC Technologies or generate 3.07% return on investment over 90 days.

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

WIN Semiconductors  vs.  CVC Technologies

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

CVC Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVC Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CVC Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WIN Semiconductors and CVC Technologies

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

The idea behind WIN Semiconductors and CVC Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.