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

0.28

Correlation Coefficient

BrainChip Holdings  Semtech

Modest diversification

The 3 months correlation between BrainChip and Semtech is 0.28. 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 generate 1.4 times less return on investment than Semtech. In addition to that, BrainChip Holdings is 1.55 times more volatile than Semtech. It trades about 0.04 of its total potential returns per unit of risk. Semtech is currently generating about 0.08 per unit of volatility. If you would invest  1,433  in Semtech on December 7, 2024 and sell it today you would earn a total of  1,917  from holding Semtech or generate 133.78% return on investment over 90 days.

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

BrainChip Holdings  vs.  Semtech

BrainChip Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BrainChip Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, BrainChip Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.