Correlation Between WiseChip Semiconductor and Advanced International

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

Diversification Opportunities for WiseChip Semiconductor and Advanced International

0.28

Correlation Coefficient

WiseChip Semiconductor  Advanced International

Modest diversification

The 3 months correlation between WiseChip and Advanced is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and Advanced International Multite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced 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 Advanced International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced International has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and Advanced International go up and down completely randomly.

Pair Corralation between WiseChip Semiconductor and Advanced International

Assuming the 90 days trading horizon WiseChip Semiconductor is expected to under-perform the Advanced International. In addition to that, WiseChip Semiconductor is 2.19 times more volatile than Advanced International Multitech. It trades about -0.07 of its total potential returns per unit of risk. Advanced International Multitech is currently generating about 0.2 per unit of volatility. If you would invest  7,360  in Advanced International Multitech on December 26, 2024 and sell it today you would earn a total of  640.00  from holding Advanced International Multitech or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

WiseChip Semiconductor  vs.  Advanced International Multite

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.

Advanced International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced International Multitech are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advanced International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with WiseChip Semiconductor and Advanced International

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

The idea behind WiseChip Semiconductor and Advanced International Multitech 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.