Correlation Between BenQ Materials and Winstek Semiconductor

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

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

Diversification Opportunities for BenQ Materials and Winstek Semiconductor

-0.47

Correlation Coefficient

BenQ Materials  Winstek Semiconductor

Very good diversification

The 3 months correlation between BenQ and Winstek is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Winstek Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winstek Semiconductor and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Winstek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winstek Semiconductor has no effect on the direction of BenQ Materials i.e., BenQ Materials and Winstek Semiconductor go up and down completely randomly.

Pair Corralation between BenQ Materials and Winstek Semiconductor

Assuming the 90 days trading horizon BenQ Materials Corp is expected to under-perform the Winstek Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, BenQ Materials Corp is 1.56 times less risky than Winstek Semiconductor. The stock trades about -0.03 of its potential returns per unit of risk. The Winstek Semiconductor Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,343  in Winstek Semiconductor Co on October 9, 2024 and sell it today you would earn a total of  2,107  from holding Winstek Semiconductor Co or generate 22.55% return on investment over 90 days.

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

BenQ Materials Corp  vs.  Winstek Semiconductor Co

BenQ Materials Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Winstek Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winstek Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Winstek 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 BenQ Materials and Winstek Semiconductor

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

The idea behind BenQ Materials Corp and Winstek Semiconductor Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.