Correlation Between SIVERS SEMICONDUCTORS and Penske Automotive

Can any of the company-specific risk be diversified away by investing in both SIVERS SEMICONDUCTORS and Penske Automotive 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 SIVERS SEMICONDUCTORS and Penske Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SIVERS SEMICONDUCTORS AB and Penske Automotive Group, you can compare the effects of market volatilities on SIVERS SEMICONDUCTORS and Penske Automotive 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 SIVERS SEMICONDUCTORS with a short position of Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIVERS SEMICONDUCTORS and Penske Automotive.

Diversification Opportunities for SIVERS SEMICONDUCTORS and Penske Automotive

-0.79

Correlation Coefficient

SIVERS SEMICONDUCTORS  Penske Automotive

Pay attention - limited upside

The 3 months correlation between SIVERS and Penske is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding SIVERS SEMICONDUCTORS AB and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB are associated (or correlated) with Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of SIVERS SEMICONDUCTORS i.e., SIVERS SEMICONDUCTORS and Penske Automotive go up and down completely randomly.

Pair Corralation between SIVERS SEMICONDUCTORS and Penske Automotive

Assuming the 90 days horizon SIVERS SEMICONDUCTORS AB is expected to generate 10.25 times more return on investment than Penske Automotive. However, SIVERS SEMICONDUCTORS is 10.25 times more volatile than Penske Automotive Group. It trades about 0.2 of its potential returns per unit of risk. Penske Automotive Group is currently generating about -0.48 per unit of risk. If you would invest  20.00  in SIVERS SEMICONDUCTORS AB on October 4, 2024 and sell it today you would earn a total of  6.00  from holding SIVERS SEMICONDUCTORS AB or generate 30.0% return on investment over 90 days.

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

SIVERS SEMICONDUCTORS AB  vs.  Penske Automotive Group

SIVERS SEMICONDUCTORS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIVERS SEMICONDUCTORS AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SIVERS SEMICONDUCTORS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Penske Automotive

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Penske Automotive Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Penske Automotive may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SIVERS SEMICONDUCTORS and Penske Automotive

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

The idea behind SIVERS SEMICONDUCTORS AB and Penske Automotive Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.