Correlation Between Leader Electronics and WIN Semiconductors
Can any of the company-specific risk be diversified away by investing in both Leader Electronics 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 Leader Electronics and WIN Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and WIN Semiconductors, you can compare the effects of market volatilities on Leader Electronics 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 Leader Electronics with a short position of WIN Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and WIN Semiconductors.
Diversification Opportunities for Leader Electronics and WIN Semiconductors
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leader and WIN is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and WIN Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN Semiconductors and Leader Electronics 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 Leader 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 Leader Electronics i.e., Leader Electronics and WIN Semiconductors go up and down completely randomly.
Pair Corralation between Leader Electronics and WIN Semiconductors
Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the WIN Semiconductors. In addition to that, Leader Electronics is 1.24 times more volatile than WIN Semiconductors. It trades about -0.17 of its total potential returns per unit of risk. WIN Semiconductors is currently generating about -0.18 per unit of volatility. If you would invest 11,950 in WIN Semiconductors on September 12, 2024 and sell it today you would lose (650.00) from holding WIN Semiconductors or give up 5.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. WIN Semiconductors
Performance |
| Timeline |
| Leader Electronics |
| WIN Semiconductors |
Leader Electronics and WIN Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and WIN Semiconductors
The main advantage of trading using opposite Leader Electronics and WIN Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics 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.| Leader Electronics vs. Yang Ming Marine | Leader Electronics vs. Wan Hai Lines | Leader Electronics vs. U Ming Marine Transport | Leader Electronics vs. Taiwan Navigation Co |
| WIN Semiconductors vs. GlobalWafers Co | WIN Semiconductors vs. Novatek Microelectronics Corp | WIN Semiconductors vs. Ruentex Development Co | WIN Semiconductors 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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