Correlation Between Will Semiconductor and Xiamen Faratronic

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

Diversification Opportunities for Will Semiconductor and Xiamen Faratronic

-0.23

Correlation Coefficient

Will Semiconductor  Xiamen Faratronic

Very good diversification

The 3 months correlation between Will and Xiamen is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Will Semiconductor Co and Xiamen Faratronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Faratronic 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 Xiamen Faratronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Faratronic has no effect on the direction of Will Semiconductor i.e., Will Semiconductor and Xiamen Faratronic go up and down completely randomly.

Pair Corralation between Will Semiconductor and Xiamen Faratronic

Assuming the 90 days trading horizon Will Semiconductor Co is expected to generate 1.3 times more return on investment than Xiamen Faratronic. However, Will Semiconductor is 1.3 times more volatile than Xiamen Faratronic Co. It trades about 0.08 of its potential returns per unit of risk. Xiamen Faratronic Co is currently generating about -0.23 per unit of risk. If you would invest  9,854  in Will Semiconductor Co on October 9, 2024 and sell it today you would earn a total of  338.00  from holding Will Semiconductor Co or generate 3.43% return on investment over 90 days.

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

Will Semiconductor Co  vs.  Xiamen Faratronic Co

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.

Xiamen Faratronic

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Will Semiconductor and Xiamen Faratronic

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

The idea behind Will Semiconductor Co and Xiamen Faratronic Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..