Correlation Between WiseChip Semiconductor and Hu Lane

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

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

Diversification Opportunities for WiseChip Semiconductor and Hu Lane

0.07

Correlation Coefficient

WiseChip Semiconductor  Hu Lane

Significant diversification

The 3 months correlation between WiseChip and 6279 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and Hu Lane Associate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hu Lane Associate 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 Hu Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hu Lane Associate has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and Hu Lane go up and down completely randomly.

Pair Corralation between WiseChip Semiconductor and Hu Lane

Assuming the 90 days trading horizon WiseChip Semiconductor is expected to under-perform the Hu Lane. But the stock apears to be less risky and, when comparing its historical volatility, WiseChip Semiconductor is 1.01 times less risky than Hu Lane. The stock trades about -0.11 of its potential returns per unit of risk. The Hu Lane Associate is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,200  in Hu Lane Associate on September 4, 2024 and sell it today you would earn a total of  1,800  from holding Hu Lane Associate or generate 11.84% return on investment over 90 days.

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

WiseChip Semiconductor  vs.  Hu Lane Associate

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 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.

Hu Lane Associate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hu Lane Associate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hu Lane showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WiseChip Semiconductor and Hu Lane

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

The idea behind WiseChip Semiconductor and Hu Lane Associate 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.