Correlation Between Will Semiconductor and Elite Color

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

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

Diversification Opportunities for Will Semiconductor and Elite Color

0.26

Correlation Coefficient

Will Semiconductor  Elite Color

Modest diversification

The 3 months correlation between Will and Elite is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Will Semiconductor Co and Elite Color Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Color Environmental and Will 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 Will Semiconductor Co are associated (or correlated) with Elite Color. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Color Environmental has no effect on the direction of Will Semiconductor i.e., Will Semiconductor and Elite Color go up and down completely randomly.

Pair Corralation between Will Semiconductor and Elite Color

Assuming the 90 days trading horizon Will Semiconductor is expected to generate 1.25 times less return on investment than Elite Color. But when comparing it to its historical volatility, Will Semiconductor Co is 1.02 times less risky than Elite Color. It trades about 0.09 of its potential returns per unit of risk. Elite Color Environmental is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  540.00  in Elite Color Environmental on September 26, 2024 and sell it today you would earn a total of  97.00  from holding Elite Color Environmental or generate 17.96% return on investment over 90 days.

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

Will Semiconductor Co  vs.  Elite Color Environmental

Will Semiconductor

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Will Semiconductor Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Will Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Elite Color Environmental

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Color Environmental are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elite Color sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Will Semiconductor and Elite Color

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

The idea behind Will Semiconductor Co and Elite Color Environmental 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.