Correlation Between Sino American and Wafer Works
Can any of the company-specific risk be diversified away by investing in both Sino American and Wafer Works 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 Sino American and Wafer Works into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino American Silicon Products and Wafer Works, you can compare the effects of market volatilities on Sino American and Wafer Works 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 Sino American with a short position of Wafer Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and Wafer Works.
Diversification Opportunities for Sino American and Wafer Works
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sino and Wafer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Silicon Products and Wafer Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wafer Works and Sino American 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 Sino American Silicon Products are associated (or correlated) with Wafer Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wafer Works has no effect on the direction of Sino American i.e., Sino American and Wafer Works go up and down completely randomly.
Pair Corralation between Sino American and Wafer Works
Assuming the 90 days trading horizon Sino American Silicon Products is expected to under-perform the Wafer Works. But the stock apears to be less risky and, when comparing its historical volatility, Sino American Silicon Products is 1.25 times less risky than Wafer Works. The stock trades about -0.21 of its potential returns per unit of risk. The Wafer Works is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 3,655 in Wafer Works on October 25, 2024 and sell it today you would lose (1,190) from holding Wafer Works or give up 32.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Sino American Silicon Products vs. Wafer Works
Performance |
| Timeline |
| Sino American Silicon |
| Wafer Works |
Sino American and Wafer Works Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino American and Wafer Works
The main advantage of trading using opposite Sino American and Wafer Works positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino American position performs unexpectedly, Wafer Works 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 Wafer Works will offset losses from the drop in Wafer Works' long position.| Sino American vs. GlobalWafers Co | Sino American vs. Wafer Works | Sino American vs. Motech Industries Co | Sino American vs. WIN Semiconductors |
| Wafer Works vs. Sino American Silicon Products | Wafer Works vs. GlobalWafers Co | Wafer Works vs. Motech Industries Co | Wafer Works vs. Formosa Sumco Technology |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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