Correlation Between Will Semiconductor and Dalian Thermal

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

Diversification Opportunities for Will Semiconductor and Dalian Thermal

-0.2

Correlation Coefficient

Will Semiconductor  Dalian Thermal

Good diversification

The 3 months correlation between Will and Dalian is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Will Semiconductor Co and Dalian Thermal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalian Thermal Power 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 Dalian Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalian Thermal Power has no effect on the direction of Will Semiconductor i.e., Will Semiconductor and Dalian Thermal go up and down completely randomly.

Pair Corralation between Will Semiconductor and Dalian Thermal

Assuming the 90 days trading horizon Will Semiconductor Co is expected to under-perform the Dalian Thermal. But the stock apears to be less risky and, when comparing its historical volatility, Will Semiconductor Co is 1.81 times less risky than Dalian Thermal. The stock trades about -0.08 of its potential returns per unit of risk. The Dalian Thermal Power is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Dalian Thermal Power on October 10, 2024 and sell it today you would lose (35.00) from holding Dalian Thermal Power or give up 5.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Will Semiconductor Co  vs.  Dalian Thermal Power

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.

Dalian Thermal Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalian Thermal Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dalian Thermal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Will Semiconductor and Dalian Thermal

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

The idea behind Will Semiconductor Co and Dalian Thermal Power 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.