Correlation Between WIN Semiconductors and Sino American
Can any of the company-specific risk be diversified away by investing in both WIN Semiconductors and Sino American 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 WIN Semiconductors and Sino American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WIN Semiconductors and Sino American Silicon Products, you can compare the effects of market volatilities on WIN Semiconductors and Sino American 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 WIN Semiconductors with a short position of Sino American. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIN Semiconductors and Sino American.
Diversification Opportunities for WIN Semiconductors and Sino American
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WIN and Sino is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Sino American Silicon Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino American Silicon and WIN Semiconductors 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 WIN Semiconductors are associated (or correlated) with Sino American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino American Silicon has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Sino American go up and down completely randomly.
Pair Corralation between WIN Semiconductors and Sino American
Assuming the 90 days trading horizon WIN Semiconductors is expected to generate 1.01 times more return on investment than Sino American. However, WIN Semiconductors is 1.01 times more volatile than Sino American Silicon Products. It trades about -0.1 of its potential returns per unit of risk. Sino American Silicon Products is currently generating about -0.37 per unit of risk. If you would invest 10,850 in WIN Semiconductors on November 4, 2024 and sell it today you would lose (450.00) from holding WIN Semiconductors or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WIN Semiconductors vs. Sino American Silicon Products
Performance |
| Timeline |
| WIN Semiconductors |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sino American Silicon |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WIN Semiconductors and Sino American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WIN Semiconductors and Sino American
The main advantage of trading using opposite WIN Semiconductors and Sino American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIN Semiconductors position performs unexpectedly, Sino American 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 Sino American will offset losses from the drop in Sino American's long position.The idea behind WIN Semiconductors and Sino American Silicon Products 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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