Correlation Between WiseChip Semiconductor and Khgears International

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

By analyzing existing cross correlation between WiseChip Semiconductor and Khgears International Limited, you can compare the effects of market volatilities on WiseChip Semiconductor and Khgears International 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 Khgears International. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseChip Semiconductor and Khgears International.

Diversification Opportunities for WiseChip Semiconductor and Khgears International

-0.47

Correlation Coefficient

WiseChip Semiconductor  Khgears International

Very good diversification

The 3 months correlation between WiseChip and Khgears is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and Khgears International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khgears International 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 Khgears International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khgears International has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and Khgears International go up and down completely randomly.

Pair Corralation between WiseChip Semiconductor and Khgears International

Assuming the 90 days trading horizon WiseChip Semiconductor is expected to generate 42.35 times less return on investment than Khgears International. But when comparing it to its historical volatility, WiseChip Semiconductor is 1.62 times less risky than Khgears International. It trades about 0.02 of its potential returns per unit of risk. Khgears International Limited is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  16,900  in Khgears International Limited on October 1, 2024 and sell it today you would earn a total of  8,650  from holding Khgears International Limited or generate 51.18% return on investment over 90 days.

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

WiseChip Semiconductor  vs.  Khgears International Limited

WiseChip Semiconductor

Risk-Adjusted Performance

0 of 100

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Khgears International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khgears International Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Khgears International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WiseChip Semiconductor and Khgears International

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

The idea behind WiseChip Semiconductor and Khgears International Limited 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.