Correlation Between Holtek Semiconductor and Winbond Electronics

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

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

Diversification Opportunities for Holtek Semiconductor and Winbond Electronics

0.56

Correlation Coefficient

Holtek Semiconductor  Winbond Electronics

Very weak diversification

The 3 months correlation between Holtek and Winbond is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Holtek Semiconductor and Winbond Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winbond Electronics Corp and Holtek 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 Holtek Semiconductor are associated (or correlated) with Winbond Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winbond Electronics Corp has no effect on the direction of Holtek Semiconductor i.e., Holtek Semiconductor and Winbond Electronics go up and down completely randomly.

Pair Corralation between Holtek Semiconductor and Winbond Electronics

Assuming the 90 days trading horizon Holtek Semiconductor is expected to generate 35.93 times less return on investment than Winbond Electronics. But when comparing it to its historical volatility, Holtek Semiconductor is 1.18 times less risky than Winbond Electronics. It trades about 0.0 of its potential returns per unit of risk. Winbond Electronics Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,500  in Winbond Electronics Corp on December 28, 2024 and sell it today you would earn a total of  370.00  from holding Winbond Electronics Corp or generate 24.67% return on investment over 90 days.

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

Holtek Semiconductor  vs.  Winbond Electronics Corp

Holtek Semiconductor

Risk-Adjusted Performance

Very Weak

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

Winbond Electronics Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Winbond Electronics Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Winbond Electronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Holtek Semiconductor and Winbond Electronics

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

The idea behind Holtek Semiconductor and Winbond Electronics Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.