Correlation Between Posiflex Technology and WIN Semiconductors

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

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

Diversification Opportunities for Posiflex Technology and WIN Semiconductors

-0.68

Correlation Coefficient

Posiflex Technology  WIN Semiconductors

Excellent diversification

The 3 months correlation between Posiflex and WIN is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Posiflex Technology and WIN Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN Semiconductors and Posiflex Technology 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 Posiflex Technology 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 Posiflex Technology i.e., Posiflex Technology and WIN Semiconductors go up and down completely randomly.

Pair Corralation between Posiflex Technology and WIN Semiconductors

Assuming the 90 days trading horizon Posiflex Technology is expected to generate 1.64 times more return on investment than WIN Semiconductors. However, Posiflex Technology is 1.64 times more volatile than WIN Semiconductors. It trades about 0.3 of its potential returns per unit of risk. WIN Semiconductors is currently generating about -0.09 per unit of risk. If you would invest  19,500  in Posiflex Technology on September 13, 2024 and sell it today you would earn a total of  14,150  from holding Posiflex Technology or generate 72.56% return on investment over 90 days.

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

Posiflex Technology  vs.  WIN Semiconductors

Posiflex Technology

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Posiflex Technology are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Posiflex Technology showed solid returns over the last few months and may actually be approaching a breakup point.

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Posiflex Technology and WIN Semiconductors

The main advantage of trading using opposite Posiflex Technology and WIN Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posiflex Technology 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 Posiflex Technology 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.