Correlation Between WIN Semiconductors and Phoenix Silicon

Can any of the company-specific risk be diversified away by investing in both WIN Semiconductors and Phoenix Silicon 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 WIN Semiconductors and Phoenix Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WIN Semiconductors and Phoenix Silicon International, you can compare the effects of market volatilities on WIN Semiconductors and Phoenix Silicon 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 WIN Semiconductors with a short position of Phoenix Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIN Semiconductors and Phoenix Silicon.

Diversification Opportunities for WIN Semiconductors and Phoenix Silicon

-0.36

Correlation Coefficient

WIN Semiconductors  Phoenix Silicon

Very good diversification

The 3 months correlation between WIN and Phoenix is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Phoenix Silicon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Silicon Inte and WIN Semiconductors 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 WIN Semiconductors are associated (or correlated) with Phoenix Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Silicon Inte has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Phoenix Silicon go up and down completely randomly.

Pair Corralation between WIN Semiconductors and Phoenix Silicon

Assuming the 90 days trading horizon WIN Semiconductors is expected to under-perform the Phoenix Silicon. But the stock apears to be less risky and, when comparing its historical volatility, WIN Semiconductors is 1.81 times less risky than Phoenix Silicon. The stock trades about -0.11 of its potential returns per unit of risk. The Phoenix Silicon International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  11,900  in Phoenix Silicon International on September 12, 2024 and sell it today you would earn a total of  1,100  from holding Phoenix Silicon International or generate 9.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WIN Semiconductors  vs.  Phoenix Silicon International

WIN Semiconductors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WIN Semiconductors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Phoenix Silicon Inte

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix Silicon International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Phoenix Silicon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with WIN Semiconductors and Phoenix Silicon

The main advantage of trading using opposite WIN Semiconductors and Phoenix Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIN Semiconductors position performs unexpectedly, Phoenix Silicon 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 Phoenix Silicon will offset losses from the drop in Phoenix Silicon's long position.

The idea behind WIN Semiconductors and Phoenix Silicon International 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.

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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.