Correlation Between Advanced Micro and Odyssey Semiconductor

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

By analyzing existing cross correlation between Advanced Micro Devices and Odyssey Semiconductor Technologies, you can compare the effects of market volatilities on Advanced Micro and Odyssey Semiconductor 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 Advanced Micro with a short position of Odyssey Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Odyssey Semiconductor.

Diversification Opportunities for Advanced Micro and Odyssey Semiconductor

-0.78

Correlation Coefficient

Advanced Micro  Odyssey Semiconductor

Pay attention - limited upside

The 3 months correlation between Advanced and Odyssey is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Odyssey Semiconductor Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Semiconductor and Advanced Micro 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 Advanced Micro Devices are associated (or correlated) with Odyssey Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Semiconductor has no effect on the direction of Advanced Micro i.e., Advanced Micro and Odyssey Semiconductor go up and down completely randomly.

Pair Corralation between Advanced Micro and Odyssey Semiconductor

Considering the 90-day investment horizon Advanced Micro Devices is expected to under-perform the Odyssey Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Micro Devices is 11.84 times less risky than Odyssey Semiconductor. The stock trades about -0.33 of its potential returns per unit of risk. The Odyssey Semiconductor Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.56  in Odyssey Semiconductor Technologies on September 23, 2024 and sell it today you would lose (0.56) from holding Odyssey Semiconductor Technologies or give up 21.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Advanced Micro Devices  vs.  Odyssey Semiconductor Technolo

Advanced Micro Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Odyssey Semiconductor

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Semiconductor Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, Odyssey Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Micro and Odyssey Semiconductor

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

The idea behind Advanced Micro Devices and Odyssey Semiconductor Technologies 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.