Correlation Between Wintec and Neosem

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

By analyzing existing cross correlation between Wintec Co and Neosem Inc, you can compare the effects of market volatilities on Wintec and Neosem 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 Wintec with a short position of Neosem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintec and Neosem.

Diversification Opportunities for Wintec and Neosem

-0.3

Correlation Coefficient

Wintec  Neosem

Very good diversification

The 3 months correlation between Wintec and Neosem is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wintec Co and Neosem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neosem Inc and Wintec 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 Wintec Co are associated (or correlated) with Neosem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neosem Inc has no effect on the direction of Wintec i.e., Wintec and Neosem go up and down completely randomly.

Pair Corralation between Wintec and Neosem

Assuming the 90 days trading horizon Wintec is expected to generate 1.92 times less return on investment than Neosem. But when comparing it to its historical volatility, Wintec Co is 1.14 times less risky than Neosem. It trades about 0.06 of its potential returns per unit of risk. Neosem Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  904,852  in Neosem Inc on December 24, 2024 and sell it today you would earn a total of  212,148  from holding Neosem Inc or generate 23.45% return on investment over 90 days.

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

Wintec Co  vs.  Neosem Inc

Wintec

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wintec Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wintec sustained solid returns over the last few months and may actually be approaching a breakup point.

Neosem Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neosem Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Neosem sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wintec and Neosem

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

The idea behind Wintec Co and Neosem Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.