Correlation Between Will Semiconductor and Xingguang Agricultural

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

Diversification Opportunities for Will Semiconductor and Xingguang Agricultural

-0.33

Correlation Coefficient

Will Semiconductor  Xingguang Agricultural

Very good diversification

The 3 months correlation between Will and Xingguang is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Will Semiconductor Co and Xingguang Agricultural Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingguang Agricultural 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 Xingguang Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingguang Agricultural has no effect on the direction of Will Semiconductor i.e., Will Semiconductor and Xingguang Agricultural go up and down completely randomly.

Pair Corralation between Will Semiconductor and Xingguang Agricultural

Assuming the 90 days trading horizon Will Semiconductor Co is expected to under-perform the Xingguang Agricultural. But the stock apears to be less risky and, when comparing its historical volatility, Will Semiconductor Co is 1.82 times less risky than Xingguang Agricultural. The stock trades about -0.12 of its potential returns per unit of risk. The Xingguang Agricultural Mach is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  807.00  in Xingguang Agricultural Mach on October 8, 2024 and sell it today you would lose (84.00) from holding Xingguang Agricultural Mach or give up 10.41% of portfolio value over 90 days.

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

Will Semiconductor Co  vs.  Xingguang Agricultural Mach

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Xingguang Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xingguang Agricultural Mach has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xingguang Agricultural 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 Xingguang Agricultural

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

The idea behind Will Semiconductor Co and Xingguang Agricultural Mach 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.