Correlation Between Holtek Semiconductor and WIN Semiconductors

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

By analyzing existing cross correlation between Holtek Semiconductor and WIN Semiconductors, you can compare the effects of market volatilities on Holtek Semiconductor and WIN Semiconductors 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 WIN Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holtek Semiconductor and WIN Semiconductors.

Diversification Opportunities for Holtek Semiconductor and WIN Semiconductors

0.02

Correlation Coefficient

Holtek Semiconductor  WIN Semiconductors

Significant diversification

The 3 months correlation between Holtek and WIN is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Holtek Semiconductor and WIN Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN Semiconductors 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 WIN Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIN Semiconductors has no effect on the direction of Holtek Semiconductor i.e., Holtek Semiconductor and WIN Semiconductors go up and down completely randomly.

Pair Corralation between Holtek Semiconductor and WIN Semiconductors

Assuming the 90 days trading horizon Holtek Semiconductor is expected to generate 0.91 times more return on investment than WIN Semiconductors. However, Holtek Semiconductor is 1.09 times less risky than WIN Semiconductors. It trades about -0.06 of its potential returns per unit of risk. WIN Semiconductors is currently generating about -0.09 per unit of risk. If you would invest  6,000  in Holtek Semiconductor on September 15, 2024 and sell it today you would lose (1,230) from holding Holtek Semiconductor or give up 20.5% of portfolio value over 90 days.

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

Holtek Semiconductor  vs.  WIN Semiconductors

Holtek Semiconductor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Holtek Semiconductor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

WIN Semiconductors

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Holtek Semiconductor and WIN Semiconductors

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

The idea behind Holtek Semiconductor and WIN Semiconductors 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.