Correlation Between Chumpower Machinery and Advanced Wireless

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

By analyzing existing cross correlation between Chumpower Machinery Corp and Advanced Wireless Semiconductor, you can compare the effects of market volatilities on Chumpower Machinery and Advanced Wireless 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 Chumpower Machinery with a short position of Advanced Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chumpower Machinery and Advanced Wireless.

Diversification Opportunities for Chumpower Machinery and Advanced Wireless

0.29

Correlation Coefficient

Chumpower Machinery  Advanced Wireless

Modest diversification

The 3 months correlation between Chumpower and Advanced is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chumpower Machinery Corp and Advanced Wireless Semiconducto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Wireless and Chumpower Machinery 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 Chumpower Machinery Corp are associated (or correlated) with Advanced Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Wireless has no effect on the direction of Chumpower Machinery i.e., Chumpower Machinery and Advanced Wireless go up and down completely randomly.

Pair Corralation between Chumpower Machinery and Advanced Wireless

Assuming the 90 days trading horizon Chumpower Machinery is expected to generate 1.63 times less return on investment than Advanced Wireless. But when comparing it to its historical volatility, Chumpower Machinery Corp is 2.76 times less risky than Advanced Wireless. It trades about 0.1 of its potential returns per unit of risk. Advanced Wireless Semiconductor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,650  in Advanced Wireless Semiconductor on October 5, 2024 and sell it today you would earn a total of  300.00  from holding Advanced Wireless Semiconductor or generate 2.82% return on investment over 90 days.

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

Chumpower Machinery Corp  vs.  Advanced Wireless Semiconducto

Chumpower Machinery Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chumpower Machinery Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Advanced Wireless

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Wireless Semiconductor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Advanced Wireless is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chumpower Machinery and Advanced Wireless

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

The idea behind Chumpower Machinery Corp and Advanced Wireless 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.