Correlation Between WiseChip Semiconductor and San Shing

Can any of the company-specific risk be diversified away by investing in both WiseChip Semiconductor and San Shing 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 San Shing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WiseChip Semiconductor and San Shing Fastech, you can compare the effects of market volatilities on WiseChip Semiconductor and San Shing 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 San Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseChip Semiconductor and San Shing.

Diversification Opportunities for WiseChip Semiconductor and San Shing

0.81

Correlation Coefficient

WiseChip Semiconductor  San Shing

Very poor diversification

The 3 months correlation between WiseChip and San is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and San Shing Fastech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Shing Fastech 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 San Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Shing Fastech has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and San Shing go up and down completely randomly.

Pair Corralation between WiseChip Semiconductor and San Shing

Assuming the 90 days trading horizon WiseChip Semiconductor is expected to under-perform the San Shing. In addition to that, WiseChip Semiconductor is 4.33 times more volatile than San Shing Fastech. It trades about -0.05 of its total potential returns per unit of risk. San Shing Fastech is currently generating about -0.06 per unit of volatility. If you would invest  5,590  in San Shing Fastech on September 12, 2024 and sell it today you would lose (120.00) from holding San Shing Fastech or give up 2.15% of portfolio value over 90 days.

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

WiseChip Semiconductor  vs.  San Shing Fastech

WiseChip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WiseChip Semiconductor 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.

San Shing Fastech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days San Shing Fastech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, San Shing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with WiseChip Semiconductor and San Shing

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

The idea behind WiseChip Semiconductor and San Shing Fastech 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.