Correlation Between WIN Semiconductors and Zhen Ding

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

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

Diversification Opportunities for WIN Semiconductors and Zhen Ding

-0.47

Correlation Coefficient

WIN Semiconductors  Zhen Ding

Very good diversification

The 3 months correlation between WIN and Zhen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Zhen Ding Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhen Ding Technology 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 Zhen Ding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhen Ding Technology has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Zhen Ding go up and down completely randomly.

Pair Corralation between WIN Semiconductors and Zhen Ding

Assuming the 90 days trading horizon WIN Semiconductors is expected to under-perform the Zhen Ding. But the stock apears to be less risky and, when comparing its historical volatility, WIN Semiconductors is 1.1 times less risky than Zhen Ding. The stock trades about -0.08 of its potential returns per unit of risk. The Zhen Ding Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,850  in Zhen Ding Technology on October 7, 2024 and sell it today you would earn a total of  1,200  from holding Zhen Ding Technology or generate 11.06% 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.  Zhen Ding Technology

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.

Zhen Ding Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhen Ding Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zhen Ding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WIN Semiconductors and Zhen Ding

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

The idea behind WIN Semiconductors and Zhen Ding 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.