Correlation Between Chia Chang and Winstek Semiconductor

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

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

Diversification Opportunities for Chia Chang and Winstek Semiconductor

-0.18

Correlation Coefficient

Chia Chang  Winstek Semiconductor

Good diversification

The 3 months correlation between Chia and Winstek is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chia Chang Co and Winstek Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winstek Semiconductor and Chia Chang 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 Chia Chang Co are associated (or correlated) with Winstek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winstek Semiconductor has no effect on the direction of Chia Chang i.e., Chia Chang and Winstek Semiconductor go up and down completely randomly.

Pair Corralation between Chia Chang and Winstek Semiconductor

Assuming the 90 days trading horizon Chia Chang Co is expected to generate 0.23 times more return on investment than Winstek Semiconductor. However, Chia Chang Co is 4.33 times less risky than Winstek Semiconductor. It trades about 0.1 of its potential returns per unit of risk. Winstek Semiconductor Co is currently generating about -0.06 per unit of risk. If you would invest  4,130  in Chia Chang Co on December 22, 2024 and sell it today you would earn a total of  120.00  from holding Chia Chang Co or generate 2.91% return on investment over 90 days.

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

Chia Chang Co  vs.  Winstek Semiconductor Co

Chia Chang

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chia Chang Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chia Chang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Winstek Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winstek Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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.

Pair Trading with Chia Chang and Winstek Semiconductor

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

The idea behind Chia Chang Co and Winstek Semiconductor Co 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.