Correlation Between WIN Semiconductors and Aspeed Technology

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

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

Diversification Opportunities for WIN Semiconductors and Aspeed Technology

0.0

Correlation Coefficient

WIN Semiconductors  Aspeed Technology

Pay attention - limited upside

The 3 months correlation between WIN and Aspeed is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Aspeed Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspeed 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 Aspeed Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspeed Technology has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Aspeed Technology go up and down completely randomly.

Pair Corralation between WIN Semiconductors and Aspeed Technology

Assuming the 90 days trading horizon WIN Semiconductors is expected to under-perform the Aspeed Technology. But the stock apears to be less risky and, when comparing its historical volatility, WIN Semiconductors is 1.2 times less risky than Aspeed Technology. The stock trades about -0.03 of its potential returns per unit of risk. The Aspeed Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  337,000  in Aspeed Technology on December 30, 2024 and sell it today you would lose (15,500) from holding Aspeed Technology or give up 4.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WIN Semiconductors  vs.  Aspeed Technology

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.

Aspeed Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aspeed Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aspeed Technology 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 Aspeed Technology

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

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