Correlation Between Bin Chuan and Weltrend Semiconductor
Can any of the company-specific risk be diversified away by investing in both Bin Chuan and Weltrend 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 Bin Chuan and Weltrend Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bin Chuan Enterprise and Weltrend Semiconductor, you can compare the effects of market volatilities on Bin Chuan and Weltrend 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 Bin Chuan with a short position of Weltrend Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bin Chuan and Weltrend Semiconductor.
Diversification Opportunities for Bin Chuan and Weltrend Semiconductor
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bin and Weltrend is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bin Chuan Enterprise and Weltrend Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weltrend Semiconductor and Bin Chuan 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 Bin Chuan Enterprise are associated (or correlated) with Weltrend Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weltrend Semiconductor has no effect on the direction of Bin Chuan i.e., Bin Chuan and Weltrend Semiconductor go up and down completely randomly.
Pair Corralation between Bin Chuan and Weltrend Semiconductor
Assuming the 90 days trading horizon Bin Chuan Enterprise is expected to generate 1.11 times more return on investment than Weltrend Semiconductor. However, Bin Chuan is 1.11 times more volatile than Weltrend Semiconductor. It trades about 0.45 of its potential returns per unit of risk. Weltrend Semiconductor is currently generating about 0.07 per unit of risk. If you would invest 2,655 in Bin Chuan Enterprise on September 12, 2024 and sell it today you would earn a total of 4,485 from holding Bin Chuan Enterprise or generate 168.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bin Chuan Enterprise vs. Weltrend Semiconductor
Performance |
| Timeline |
| Bin Chuan Enterprise |
| Weltrend Semiconductor |
Bin Chuan and Weltrend Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bin Chuan and Weltrend Semiconductor
The main advantage of trading using opposite Bin Chuan and Weltrend Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bin Chuan position performs unexpectedly, Weltrend 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 Weltrend Semiconductor will offset losses from the drop in Weltrend Semiconductor's long position.| Bin Chuan vs. Lihtai Construction Enterprise | Bin Chuan vs. Sports Gear Co | Bin Chuan vs. Eastern Media International | Bin Chuan vs. Kindom Construction Corp |
| Weltrend Semiconductor vs. AU Optronics | Weltrend Semiconductor vs. Innolux Corp | Weltrend Semiconductor vs. Ruentex Development Co | Weltrend Semiconductor vs. WiseChip Semiconductor |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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