Correlation Between Macronix International and Optotech Corp

Can any of the company-specific risk be diversified away by investing in both Macronix International and Optotech Corp 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 Macronix International and Optotech Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Macronix International and Optotech Corp

0.92

Correlation Coefficient

Macronix International  Optotech Corp

Almost no diversification

The 3 months correlation between Macronix and Optotech is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Macronix International Co and Optotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optotech Corp and Macronix International 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 Macronix International Co are associated (or correlated) with Optotech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optotech Corp has no effect on the direction of Macronix International i.e., Macronix International and Optotech Corp go up and down completely randomly.

Pair Corralation between Macronix International and Optotech Corp

Assuming the 90 days trading horizon Macronix International Co is expected to under-perform the Optotech Corp. In addition to that, Macronix International is 1.22 times more volatile than Optotech Corp. It trades about -0.18 of its total potential returns per unit of risk. Optotech Corp is currently generating about -0.2 per unit of volatility. If you would invest  3,645  in Optotech Corp on September 15, 2024 and sell it today you would lose (760.00) from holding Optotech Corp or give up 20.85% of portfolio value over 90 days.

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

Macronix International Co  vs.  Optotech Corp

Macronix International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macronix International Co 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.

Optotech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optotech Corp 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 Macronix International and Optotech Corp

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

The idea behind Macronix International Co and Optotech Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.