Correlation Between San Fu and WiseChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both San Fu and WiseChip 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 San Fu and WiseChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Fu Chemical and WiseChip Semiconductor, you can compare the effects of market volatilities on San Fu and WiseChip 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 San Fu with a short position of WiseChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Fu and WiseChip Semiconductor.
Diversification Opportunities for San Fu and WiseChip Semiconductor
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between San and WiseChip is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding San Fu Chemical and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip Semiconductor and San Fu 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 San Fu Chemical are associated (or correlated) with WiseChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseChip Semiconductor has no effect on the direction of San Fu i.e., San Fu and WiseChip Semiconductor go up and down completely randomly.
Pair Corralation between San Fu and WiseChip Semiconductor
Assuming the 90 days trading horizon San Fu Chemical is expected to generate 1.06 times more return on investment than WiseChip Semiconductor. However, San Fu is 1.06 times more volatile than WiseChip Semiconductor. It trades about 0.0 of its potential returns per unit of risk. WiseChip Semiconductor is currently generating about -0.04 per unit of risk. If you would invest 13,250 in San Fu Chemical on October 23, 2024 and sell it today you would lose (1,050) from holding San Fu Chemical or give up 7.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
San Fu Chemical vs. WiseChip Semiconductor
Performance |
| Timeline |
| San Fu Chemical |
| WiseChip Semiconductor |
San Fu and WiseChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Fu and WiseChip Semiconductor
The main advantage of trading using opposite San Fu and WiseChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Fu position performs unexpectedly, WiseChip 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 WiseChip Semiconductor will offset losses from the drop in WiseChip Semiconductor's long position.| San Fu vs. Nuvoton Technology Corp | San Fu vs. Shiny Chemical Industrial | San Fu vs. Jinan Acetate Chemical | San Fu vs. Coremax Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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