Correlation Between Will Semiconductor and Beijing Compass

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

Diversification Opportunities for Will Semiconductor and Beijing Compass

0.72

Correlation Coefficient

Will Semiconductor  Beijing Compass

Poor diversification

The 3 months correlation between Will and Beijing is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Will Semiconductor Co and Beijing Compass Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Compass Tech 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 Beijing Compass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Compass Tech has no effect on the direction of Will Semiconductor i.e., Will Semiconductor and Beijing Compass go up and down completely randomly.

Pair Corralation between Will Semiconductor and Beijing Compass

Assuming the 90 days trading horizon Will Semiconductor Co is expected to under-perform the Beijing Compass. But the stock apears to be less risky and, when comparing its historical volatility, Will Semiconductor Co is 1.95 times less risky than Beijing Compass. The stock trades about -0.01 of its potential returns per unit of risk. The Beijing Compass Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,516  in Beijing Compass Technology on September 22, 2024 and sell it today you would earn a total of  131.00  from holding Beijing Compass Technology or generate 1.38% return on investment over 90 days.

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

Will Semiconductor Co  vs.  Beijing Compass Technology

Will Semiconductor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Will Semiconductor Co are ranked lower than 11 (%) 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.

Beijing Compass Tech

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Compass Technology are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Compass sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Will Semiconductor and Beijing Compass

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

The idea behind Will Semiconductor Co and Beijing Compass Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.