Correlation Between WiseChip Semiconductor and Powertech Technology
Can any of the company-specific risk be diversified away by investing in both WiseChip Semiconductor and Powertech Technology 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 WiseChip Semiconductor and Powertech Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseChip Semiconductor and Powertech Technology, you can compare the effects of market volatilities on WiseChip Semiconductor and Powertech Technology 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 WiseChip Semiconductor with a short position of Powertech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseChip Semiconductor and Powertech Technology.
Diversification Opportunities for WiseChip Semiconductor and Powertech Technology
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WiseChip and Powertech is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and Powertech Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertech Technology and WiseChip Semiconductor 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 WiseChip Semiconductor are associated (or correlated) with Powertech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertech Technology has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and Powertech Technology go up and down completely randomly.
Pair Corralation between WiseChip Semiconductor and Powertech Technology
Assuming the 90 days trading horizon WiseChip Semiconductor is expected to generate 2.22 times more return on investment than Powertech Technology. However, WiseChip Semiconductor is 2.22 times more volatile than Powertech Technology. It trades about -0.01 of its potential returns per unit of risk. Powertech Technology is currently generating about -0.21 per unit of risk. If you would invest 3,515 in WiseChip Semiconductor on September 14, 2024 and sell it today you would lose (45.00) from holding WiseChip Semiconductor or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseChip Semiconductor vs. Powertech Technology
Performance |
| Timeline |
| WiseChip Semiconductor |
| Powertech Technology |
WiseChip Semiconductor and Powertech Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseChip Semiconductor and Powertech Technology
The main advantage of trading using opposite WiseChip Semiconductor and Powertech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseChip Semiconductor position performs unexpectedly, Powertech Technology 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 Powertech Technology will offset losses from the drop in Powertech Technology's long position.| WiseChip Semiconductor vs. AU Optronics | WiseChip Semiconductor vs. Innolux Corp | WiseChip Semiconductor vs. Ruentex Development Co | WiseChip Semiconductor vs. Novatek Microelectronics Corp |
| Powertech Technology vs. AU Optronics | Powertech Technology vs. Innolux Corp | Powertech Technology vs. Ruentex Development Co | Powertech Technology 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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