Correlation Between China Petrochemical and WiseChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and WiseChip 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 China Petrochemical and WiseChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Petrochemical Development and WiseChip Semiconductor, you can compare the effects of market volatilities on China Petrochemical and WiseChip 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 China Petrochemical with a short position of WiseChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and WiseChip Semiconductor.
Diversification Opportunities for China Petrochemical and WiseChip Semiconductor
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and WiseChip is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip Semiconductor and China Petrochemical 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 China Petrochemical Development are associated (or correlated) with WiseChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseChip Semiconductor has no effect on the direction of China Petrochemical i.e., China Petrochemical and WiseChip Semiconductor go up and down completely randomly.
Pair Corralation between China Petrochemical and WiseChip Semiconductor
Assuming the 90 days trading horizon China Petrochemical Development is expected to under-perform the WiseChip Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, China Petrochemical Development is 1.38 times less risky than WiseChip Semiconductor. The stock trades about -0.02 of its potential returns per unit of risk. The WiseChip Semiconductor is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,940 in WiseChip Semiconductor on September 12, 2024 and sell it today you would lose (535.00) from holding WiseChip Semiconductor or give up 13.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petrochemical Developmen vs. WiseChip Semiconductor
Performance |
| Timeline |
| China Petrochemical |
| WiseChip Semiconductor |
China Petrochemical and WiseChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and WiseChip Semiconductor
The main advantage of trading using opposite China Petrochemical and WiseChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, WiseChip 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 WiseChip Semiconductor will offset losses from the drop in WiseChip Semiconductor's long position.| China Petrochemical vs. Tainan Spinning Co | China Petrochemical vs. Lealea Enterprise Co | China Petrochemical vs. Ruentex Development Co | China Petrochemical vs. WiseChip Semiconductor |
| WiseChip Semiconductor vs. AU Optronics | WiseChip Semiconductor vs. Innolux Corp | WiseChip Semiconductor vs. Ruentex Development Co | WiseChip Semiconductor vs. Novatek Microelectronics Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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