Correlation Between Top Union and WIN Semiconductors

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

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

Diversification Opportunities for Top Union and WIN Semiconductors

-0.44

Correlation Coefficient

Top Union  WIN Semiconductors

Very good diversification

The 3 months correlation between Top and WIN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Top Union Electronics and WIN Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN Semiconductors and Top Union 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 Top Union Electronics 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 Top Union i.e., Top Union and WIN Semiconductors go up and down completely randomly.

Pair Corralation between Top Union and WIN Semiconductors

Assuming the 90 days trading horizon Top Union Electronics is expected to generate 0.53 times more return on investment than WIN Semiconductors. However, Top Union Electronics is 1.87 times less risky than WIN Semiconductors. It trades about 0.07 of its potential returns per unit of risk. WIN Semiconductors is currently generating about -0.13 per unit of risk. If you would invest  3,195  in Top Union Electronics on September 3, 2024 and sell it today you would earn a total of  135.00  from holding Top Union Electronics or generate 4.23% return on investment over 90 days.

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

Top Union Electronics  vs.  WIN Semiconductors

Top Union Electronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Top Union Electronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Top Union is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the 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 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.

Pair Trading with Top Union and WIN Semiconductors

The main advantage of trading using opposite Top Union and WIN Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Union 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 Top Union Electronics 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.