Correlation Between BrainChip Holdings and Semtech

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

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

Diversification Opportunities for BrainChip Holdings and Semtech

0.69

Correlation Coefficient

BrainChip Holdings  Semtech

Poor diversification

The 3 months correlation between BrainChip and Semtech is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech and BrainChip Holdings 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 BrainChip Holdings are associated (or correlated) with Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of BrainChip Holdings i.e., BrainChip Holdings and Semtech go up and down completely randomly.

Pair Corralation between BrainChip Holdings and Semtech

Assuming the 90 days horizon BrainChip Holdings is expected to under-perform the Semtech. But the otc stock apears to be less risky and, when comparing its historical volatility, BrainChip Holdings is 1.46 times less risky than Semtech. The otc stock trades about -0.17 of its potential returns per unit of risk. The Semtech is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  6,170  in Semtech on December 29, 2024 and sell it today you would lose (2,665) from holding Semtech or give up 43.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

BrainChip Holdings  vs.  Semtech

BrainChip Holdings

Risk-Adjusted Performance

Very Weak

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

Semtech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BrainChip Holdings and Semtech

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

The idea behind BrainChip Holdings and Semtech 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 Global Correlations module to find global opportunities by holding instruments from different markets.