Correlation Between GlobalWafers and Xintec
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and Xintec 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 GlobalWafers and Xintec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalWafers Co and Xintec, you can compare the effects of market volatilities on GlobalWafers and Xintec 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 GlobalWafers with a short position of Xintec. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Xintec.
Diversification Opportunities for GlobalWafers and Xintec
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlobalWafers and Xintec is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of GlobalWafers i.e., GlobalWafers and Xintec go up and down completely randomly.
Pair Corralation between GlobalWafers and Xintec
Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Xintec. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 1.65 times less risky than Xintec. The stock trades about -0.02 of its potential returns per unit of risk. The Xintec is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,363 in Xintec on September 2, 2024 and sell it today you would earn a total of 6,737 from holding Xintec or generate 54.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. Xintec
Performance |
| Timeline |
| GlobalWafers |
| Xintec |
GlobalWafers and Xintec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and Xintec
The main advantage of trading using opposite GlobalWafers and Xintec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, Xintec 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 Xintec will offset losses from the drop in Xintec's long position.| GlobalWafers vs. WIN Semiconductors | GlobalWafers vs. Sino American Silicon Products | GlobalWafers vs. Novatek Microelectronics Corp | GlobalWafers vs. Yageo Corp |
| Xintec vs. STL Technology Co | Xintec vs. Fubon Taiwan Technology | Xintec vs. Nova Technology | Xintec vs. Hunya Foods Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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