Correlation Between FIC Global and Weltrend Semiconductor
Can any of the company-specific risk be diversified away by investing in both FIC Global 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 FIC Global and Weltrend Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIC Global and Weltrend Semiconductor, you can compare the effects of market volatilities on FIC Global 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 FIC Global with a short position of Weltrend Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIC Global and Weltrend Semiconductor.
Diversification Opportunities for FIC Global and Weltrend Semiconductor
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between FIC and Weltrend is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding FIC Global and Weltrend Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weltrend Semiconductor and FIC Global 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 FIC Global 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 FIC Global i.e., FIC Global and Weltrend Semiconductor go up and down completely randomly.
Pair Corralation between FIC Global and Weltrend Semiconductor
Assuming the 90 days trading horizon FIC Global is expected to under-perform the Weltrend Semiconductor. In addition to that, FIC Global is 1.66 times more volatile than Weltrend Semiconductor. It trades about -0.06 of its total potential returns per unit of risk. Weltrend Semiconductor is currently generating about 0.04 per unit of volatility. If you would invest 5,450 in Weltrend Semiconductor on November 2, 2024 and sell it today you would earn a total of 60.00 from holding Weltrend Semiconductor or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIC Global vs. Weltrend Semiconductor
Performance |
| Timeline |
| FIC Global |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Weltrend Semiconductor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FIC Global and Weltrend Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIC Global and Weltrend Semiconductor
The main advantage of trading using opposite FIC Global and Weltrend Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIC Global 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.The idea behind FIC Global and Weltrend Semiconductor 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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