Correlation Between Wisekey International and ChipMOS Technologies

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

By analyzing existing cross correlation between Wisekey International Holding and ChipMOS Technologies, you can compare the effects of market volatilities on Wisekey International and ChipMOS Technologies 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 Wisekey International with a short position of ChipMOS Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisekey International and ChipMOS Technologies.

Diversification Opportunities for Wisekey International and ChipMOS Technologies

-0.3

Correlation Coefficient

Wisekey International  ChipMOS Technologies

Very good diversification

The 3 months correlation between Wisekey and ChipMOS is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wisekey International Holding and ChipMOS Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipMOS Technologies and Wisekey International 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 Wisekey International Holding are associated (or correlated) with ChipMOS Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipMOS Technologies has no effect on the direction of Wisekey International i.e., Wisekey International and ChipMOS Technologies go up and down completely randomly.

Pair Corralation between Wisekey International and ChipMOS Technologies

Given the investment horizon of 90 days Wisekey International Holding is expected to under-perform the ChipMOS Technologies. In addition to that, Wisekey International is 1.76 times more volatile than ChipMOS Technologies. It trades about -0.48 of its total potential returns per unit of risk. ChipMOS Technologies is currently generating about -0.14 per unit of volatility. If you would invest  2,035  in ChipMOS Technologies on November 29, 2024 and sell it today you would lose (146.00) from holding ChipMOS Technologies or give up 7.17% of portfolio value over 90 days.

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

Wisekey International Holding  vs.  ChipMOS Technologies

Wisekey International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wisekey International Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Wisekey International showed solid returns over the last few months and may actually be approaching a breakup point.

ChipMOS Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days ChipMOS Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ChipMOS Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wisekey International and ChipMOS Technologies

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

The idea behind Wisekey International Holding and ChipMOS Technologies 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.