Correlation Between King Yuan and WIN Semiconductors
Can any of the company-specific risk be diversified away by investing in both King Yuan 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 King Yuan and WIN Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between King Yuan Electronics and WIN Semiconductors, you can compare the effects of market volatilities on King Yuan 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 King Yuan with a short position of WIN Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of King Yuan and WIN Semiconductors.
Diversification Opportunities for King Yuan and WIN Semiconductors
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between King and WIN is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding King Yuan Electronics and WIN Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN Semiconductors and King Yuan 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 King Yuan Electronics 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 King Yuan i.e., King Yuan and WIN Semiconductors go up and down completely randomly.
Pair Corralation between King Yuan and WIN Semiconductors
Assuming the 90 days trading horizon King Yuan Electronics is expected to generate 0.85 times more return on investment than WIN Semiconductors. However, King Yuan Electronics is 1.17 times less risky than WIN Semiconductors. It trades about -0.07 of its potential returns per unit of risk. WIN Semiconductors is currently generating about -0.06 per unit of risk. If you would invest 11,650 in King Yuan Electronics on November 5, 2024 and sell it today you would lose (300.00) from holding King Yuan Electronics or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
King Yuan Electronics vs. WIN Semiconductors
Performance |
| Timeline |
| King Yuan Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| WIN Semiconductors |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
King Yuan and WIN Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with King Yuan and WIN Semiconductors
The main advantage of trading using opposite King Yuan and WIN Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King Yuan 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 King Yuan Electronics 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.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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