Correlation Between Chia Chang and WiseChip Semiconductor

Can any of the company-specific risk be diversified away by investing in both Chia Chang 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 Chia Chang and WiseChip 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 WiseChip Semiconductor, you can compare the effects of market volatilities on Chia Chang 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 Chia Chang with a short position of WiseChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Chang and WiseChip Semiconductor.

Diversification Opportunities for Chia Chang and WiseChip Semiconductor

-0.12

Correlation Coefficient

Chia Chang  WiseChip Semiconductor

Good diversification

The 3 months correlation between Chia and WiseChip is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chia Chang Co and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip 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 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 Chia Chang i.e., Chia Chang and WiseChip Semiconductor go up and down completely randomly.

Pair Corralation between Chia Chang and WiseChip Semiconductor

Assuming the 90 days trading horizon Chia Chang Co is expected to generate 0.31 times more return on investment than WiseChip Semiconductor. However, Chia Chang Co is 3.19 times less risky than WiseChip Semiconductor. It trades about 0.07 of its potential returns per unit of risk. WiseChip Semiconductor is currently generating about -0.12 per unit of risk. If you would invest  4,115  in Chia Chang Co on December 28, 2024 and sell it today you would earn a total of  75.00  from holding Chia Chang Co or generate 1.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.21%
Values	Daily Returns

Chia Chang Co  vs.  WiseChip Semiconductor

Chia Chang

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chia Chang Co are ranked lower than 5 (%) 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.

WiseChip Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days WiseChip Semiconductor 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 WiseChip Semiconductor

The main advantage of trading using opposite Chia Chang and WiseChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Chang 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 Chia Chang Co 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.