Correlation Between WiseChip Semiconductor and CHC Healthcare

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

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

Diversification Opportunities for WiseChip Semiconductor and CHC Healthcare

0.07

Correlation Coefficient

WiseChip Semiconductor  CHC Healthcare

Significant diversification

The 3 months correlation between WiseChip and CHC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and CHC Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Healthcare Group and WiseChip Semiconductor 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 WiseChip Semiconductor are associated (or correlated) with CHC Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Healthcare Group has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and CHC Healthcare go up and down completely randomly.

Pair Corralation between WiseChip Semiconductor and CHC Healthcare

Assuming the 90 days trading horizon WiseChip Semiconductor is expected to under-perform the CHC Healthcare. In addition to that, WiseChip Semiconductor is 1.24 times more volatile than CHC Healthcare Group. It trades about -0.01 of its total potential returns per unit of risk. CHC Healthcare Group is currently generating about 0.0 per unit of volatility. If you would invest  5,860  in CHC Healthcare Group on December 4, 2024 and sell it today you would lose (170.00) from holding CHC Healthcare Group or give up 2.9% of portfolio value over 90 days.

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

WiseChip Semiconductor  vs.  CHC Healthcare Group

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 fairly stable basic indicators, WiseChip Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CHC Healthcare Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CHC Healthcare Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CHC Healthcare showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WiseChip Semiconductor and CHC Healthcare

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

The idea behind WiseChip Semiconductor and CHC Healthcare Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .