Correlation Between Chicony Power and WiseChip Semiconductor

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

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

Diversification Opportunities for Chicony Power and WiseChip Semiconductor

0.73

Correlation Coefficient

Chicony Power  WiseChip Semiconductor

Poor diversification

The 3 months correlation between Chicony and WiseChip is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chicony Power Technology and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip Semiconductor and Chicony Power 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 Chicony Power Technology are associated (or correlated) with WiseChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseChip Semiconductor has no effect on the direction of Chicony Power i.e., Chicony Power and WiseChip Semiconductor go up and down completely randomly.

Pair Corralation between Chicony Power and WiseChip Semiconductor

Assuming the 90 days trading horizon Chicony Power Technology is expected to generate 1.21 times more return on investment than WiseChip Semiconductor. However, Chicony Power is 1.21 times more volatile than WiseChip Semiconductor. It trades about 0.05 of its potential returns per unit of risk. WiseChip Semiconductor is currently generating about -0.03 per unit of risk. If you would invest  7,360  in Chicony Power Technology on September 16, 2024 and sell it today you would earn a total of  4,840  from holding Chicony Power Technology or generate 65.76% return on investment over 90 days.

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

Chicony Power Technology  vs.  WiseChip Semiconductor

Chicony Power Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chicony Power Technology 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.

WiseChip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Chicony Power and WiseChip Semiconductor

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

The idea behind Chicony Power Technology and WiseChip Semiconductor 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.