Correlation Between ITM Semiconductor and PH Tech

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

By analyzing existing cross correlation between ITM Semiconductor Co and PH Tech Co, you can compare the effects of market volatilities on ITM Semiconductor and PH Tech 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 ITM Semiconductor with a short position of PH Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Semiconductor and PH Tech.

Diversification Opportunities for ITM Semiconductor and PH Tech

-0.46

Correlation Coefficient

ITM Semiconductor  PH Tech

Very good diversification

The 3 months correlation between ITM and 239890 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding ITM Semiconductor Co and PH Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PH Tech and ITM 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 ITM Semiconductor Co are associated (or correlated) with PH Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PH Tech has no effect on the direction of ITM Semiconductor i.e., ITM Semiconductor and PH Tech go up and down completely randomly.

Pair Corralation between ITM Semiconductor and PH Tech

Assuming the 90 days trading horizon ITM Semiconductor Co is expected to under-perform the PH Tech. But the stock apears to be less risky and, when comparing its historical volatility, ITM Semiconductor Co is 1.59 times less risky than PH Tech. The stock trades about -0.22 of its potential returns per unit of risk. The PH Tech Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  679,000  in PH Tech Co on October 25, 2024 and sell it today you would earn a total of  109,000  from holding PH Tech Co or generate 16.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

ITM Semiconductor Co  vs.  PH Tech Co

ITM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITM Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

PH Tech

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PH Tech Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PH Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ITM Semiconductor and PH Tech

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

The idea behind ITM Semiconductor Co and PH Tech Co 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.