Correlation Between Will Semiconductor and Tianjin Jingwei

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

Diversification Opportunities for Will Semiconductor and Tianjin Jingwei

0.17

Correlation Coefficient

Will Semiconductor  Tianjin Jingwei

Average diversification

The 3 months correlation between Will and Tianjin is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Will Semiconductor Co and Tianjin Jingwei Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Jingwei Electric 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 Tianjin Jingwei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Jingwei Electric has no effect on the direction of Will Semiconductor i.e., Will Semiconductor and Tianjin Jingwei go up and down completely randomly.

Pair Corralation between Will Semiconductor and Tianjin Jingwei

Assuming the 90 days trading horizon Will Semiconductor is expected to generate 4.07 times less return on investment than Tianjin Jingwei. But when comparing it to its historical volatility, Will Semiconductor Co is 2.51 times less risky than Tianjin Jingwei. It trades about 0.03 of its potential returns per unit of risk. Tianjin Jingwei Electric is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  683.00  in Tianjin Jingwei Electric on October 9, 2024 and sell it today you would earn a total of  157.00  from holding Tianjin Jingwei Electric or generate 22.99% return on investment over 90 days.

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

Will Semiconductor Co  vs.  Tianjin Jingwei Electric

Will Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Will Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tianjin Jingwei Electric

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Will Semiconductor and Tianjin Jingwei

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

The idea behind Will Semiconductor Co and Tianjin Jingwei Electric 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.