Correlation Between GlobalWafers and Analog Integrations

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

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

Diversification Opportunities for GlobalWafers and Analog Integrations

0.67

Correlation Coefficient

GlobalWafers  Analog Integrations

Poor diversification

The 3 months correlation between GlobalWafers and Analog is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Analog Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Integrations and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with Analog Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Integrations has no effect on the direction of GlobalWafers i.e., GlobalWafers and Analog Integrations go up and down completely randomly.

Pair Corralation between GlobalWafers and Analog Integrations

Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Analog Integrations. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 2.02 times less risky than Analog Integrations. The stock trades about -0.22 of its potential returns per unit of risk. The Analog Integrations is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  11,800  in Analog Integrations on September 21, 2024 and sell it today you would lose (2,200) from holding Analog Integrations or give up 18.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

GlobalWafers Co  vs.  Analog Integrations

GlobalWafers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlobalWafers Co 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.

Analog Integrations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Integrations 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 GlobalWafers and Analog Integrations

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

The idea behind GlobalWafers Co and Analog Integrations 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.