Correlation Between WiseChip Semiconductor and Lemtech Holdings

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

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

Diversification Opportunities for WiseChip Semiconductor and Lemtech Holdings

-0.47

Correlation Coefficient

WiseChip Semiconductor  Lemtech Holdings

Very good diversification

The 3 months correlation between WiseChip and Lemtech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and Lemtech Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemtech Holdings 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 Lemtech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemtech Holdings has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and Lemtech Holdings go up and down completely randomly.

Pair Corralation between WiseChip Semiconductor and Lemtech Holdings

Assuming the 90 days trading horizon WiseChip Semiconductor is expected to generate 5.03 times less return on investment than Lemtech Holdings. But when comparing it to its historical volatility, WiseChip Semiconductor is 1.83 times less risky than Lemtech Holdings. It trades about 0.01 of its potential returns per unit of risk. Lemtech Holdings Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,926  in Lemtech Holdings Co on December 4, 2024 and sell it today you would earn a total of  374.00  from holding Lemtech Holdings Co or generate 2.89% return on investment over 90 days.

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

WiseChip Semiconductor  vs.  Lemtech Holdings Co

WiseChip Semiconductor

Risk-Adjusted Performance

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 fairly stable basic indicators, WiseChip Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lemtech Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lemtech Holdings Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lemtech Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with WiseChip Semiconductor and Lemtech Holdings

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

The idea behind WiseChip Semiconductor and Lemtech Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.