Correlation Between BrainChip Holdings and Sitime

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

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

Diversification Opportunities for BrainChip Holdings and Sitime

0.25

Correlation Coefficient

BrainChip Holdings  Sitime

Modest diversification

The 3 months correlation between BrainChip and Sitime is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and Sitime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitime 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 Sitime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitime has no effect on the direction of BrainChip Holdings i.e., BrainChip Holdings and Sitime go up and down completely randomly.

Pair Corralation between BrainChip Holdings and Sitime

Assuming the 90 days horizon BrainChip Holdings is expected to generate 2.98 times less return on investment than Sitime. In addition to that, BrainChip Holdings is 1.7 times more volatile than Sitime. It trades about 0.04 of its total potential returns per unit of risk. Sitime is currently generating about 0.19 per unit of volatility. If you would invest  18,415  in Sitime on September 19, 2024 and sell it today you would earn a total of  6,582  from holding Sitime or generate 35.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

BrainChip Holdings  vs.  Sitime

BrainChip Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrainChip Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, BrainChip Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Sitime

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sitime are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Sitime displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BrainChip Holdings and Sitime

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

The idea behind BrainChip Holdings and Sitime 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.