Correlation Between Wafer Works and Winstek Semiconductor

Can any of the company-specific risk be diversified away by investing in both Wafer Works and Winstek Semiconductor 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 Wafer Works and Winstek Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wafer Works and Winstek Semiconductor Co, you can compare the effects of market volatilities on Wafer Works and Winstek Semiconductor 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 Wafer Works with a short position of Winstek Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wafer Works and Winstek Semiconductor.

Diversification Opportunities for Wafer Works and Winstek Semiconductor

-0.28

Correlation Coefficient

Wafer Works  Winstek Semiconductor

Very good diversification

The 3 months correlation between Wafer and Winstek is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and Winstek Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winstek Semiconductor and Wafer Works 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 Wafer Works are associated (or correlated) with Winstek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winstek Semiconductor has no effect on the direction of Wafer Works i.e., Wafer Works and Winstek Semiconductor go up and down completely randomly.

Pair Corralation between Wafer Works and Winstek Semiconductor

Assuming the 90 days trading horizon Wafer Works is expected to under-perform the Winstek Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Wafer Works is 1.14 times less risky than Winstek Semiconductor. The stock trades about -0.13 of its potential returns per unit of risk. The Winstek Semiconductor Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  13,500  in Winstek Semiconductor Co on October 8, 2024 and sell it today you would lose (2,300) from holding Winstek Semiconductor Co or give up 17.04% of portfolio value over 90 days.

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

Wafer Works  vs.  Winstek Semiconductor Co

Wafer Works

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wafer Works has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Winstek Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winstek Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Winstek Semiconductor is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Wafer Works and Winstek Semiconductor

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

The idea behind Wafer Works and Winstek Semiconductor 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.