Correlation Between Integrated Service and WIN Semiconductors

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

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

Diversification Opportunities for Integrated Service and WIN Semiconductors

0.6

Correlation Coefficient

Integrated Service  WIN Semiconductors

Poor diversification

The 3 months correlation between Integrated and WIN is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Service Technology and WIN Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN Semiconductors and Integrated Service 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 Integrated Service Technology are associated (or correlated) with WIN Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIN Semiconductors has no effect on the direction of Integrated Service i.e., Integrated Service and WIN Semiconductors go up and down completely randomly.

Pair Corralation between Integrated Service and WIN Semiconductors

Assuming the 90 days trading horizon Integrated Service Technology is expected to under-perform the WIN Semiconductors. In addition to that, Integrated Service is 1.37 times more volatile than WIN Semiconductors. It trades about -0.1 of its total potential returns per unit of risk. WIN Semiconductors is currently generating about -0.1 per unit of volatility. If you would invest  13,000  in WIN Semiconductors on September 13, 2024 and sell it today you would lose (1,600) from holding WIN Semiconductors or give up 12.31% of portfolio value over 90 days.

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

Integrated Service Technology  vs.  WIN Semiconductors

Integrated Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Service Technology 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.

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Integrated Service and WIN Semiconductors

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

The idea behind Integrated Service Technology and WIN Semiconductors 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.