Correlation Between WIN Semiconductors and WiseChip Semiconductor

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

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

Diversification Opportunities for WIN Semiconductors and WiseChip Semiconductor

0.6

Correlation Coefficient

WIN Semiconductors  WiseChip Semiconductor

Poor diversification

The 3 months correlation between WIN and WiseChip is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip Semiconductor 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 WiseChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseChip Semiconductor has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and WiseChip Semiconductor go up and down completely randomly.

Pair Corralation between WIN Semiconductors and WiseChip Semiconductor

Assuming the 90 days trading horizon WIN Semiconductors is expected to generate 1.31 times more return on investment than WiseChip Semiconductor. However, WIN Semiconductors is 1.31 times more volatile than WiseChip Semiconductor. It trades about 0.02 of its potential returns per unit of risk. WiseChip Semiconductor is currently generating about 0.02 per unit of risk. If you would invest  11,000  in WIN Semiconductors on December 2, 2024 and sell it today you would earn a total of  100.00  from holding WIN Semiconductors or generate 0.91% 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.  WiseChip Semiconductor

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.

WiseChip Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WiseChip Semiconductor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, WiseChip Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with WIN Semiconductors and WiseChip Semiconductor

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

The idea behind WIN Semiconductors and WiseChip Semiconductor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.