Correlation Between Advanced Wireless and Xintec

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

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

Diversification Opportunities for Advanced Wireless and Xintec

0.06

Correlation Coefficient

Advanced Wireless  Xintec

Significant diversification

The 3 months correlation between Advanced and Xintec is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Wireless Semiconducto and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec and Advanced Wireless 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 Advanced Wireless Semiconductor are associated (or correlated) with Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of Advanced Wireless i.e., Advanced Wireless and Xintec go up and down completely randomly.

Pair Corralation between Advanced Wireless and Xintec

Assuming the 90 days trading horizon Advanced Wireless Semiconductor is expected to generate 1.56 times more return on investment than Xintec. However, Advanced Wireless is 1.56 times more volatile than Xintec. It trades about 0.18 of its potential returns per unit of risk. Xintec is currently generating about 0.14 per unit of risk. If you would invest  9,980  in Advanced Wireless Semiconductor on September 27, 2024 and sell it today you would earn a total of  1,070  from holding Advanced Wireless Semiconductor or generate 10.72% return on investment over 90 days.

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

Advanced Wireless Semiconducto  vs.  Xintec

Advanced Wireless

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Wireless Semiconductor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Advanced Wireless is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Xintec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xintec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Xintec 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 Advanced Wireless and Xintec

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

The idea behind Advanced Wireless Semiconductor and Xintec 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.