Correlation Between Diodes Incorporated and SPI Energy

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

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

Diversification Opportunities for Diodes Incorporated and SPI Energy

-0.51

Correlation Coefficient

Diodes Incorporated  SPI Energy

Excellent diversification

The 3 months correlation between Diodes and SPI is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Diodes Incorporated and SPI Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPI Energy and Diodes Incorporated 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 Diodes Incorporated are associated (or correlated) with SPI Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPI Energy has no effect on the direction of Diodes Incorporated i.e., Diodes Incorporated and SPI Energy go up and down completely randomly.

Pair Corralation between Diodes Incorporated and SPI Energy

Given the investment horizon of 90 days Diodes Incorporated is expected to under-perform the SPI Energy. But the stock apears to be less risky and, when comparing its historical volatility, Diodes Incorporated is 9.0 times less risky than SPI Energy. The stock trades about -0.21 of its potential returns per unit of risk. The SPI Energy Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  38.00  in SPI Energy Co on December 24, 2024 and sell it today you would lose (2.00) from holding SPI Energy Co or give up 5.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	25.0%
Values	Daily Returns

Diodes Incorporated  vs.  SPI Energy Co

Diodes Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diodes Incorporated 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 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.

SPI Energy

Risk-Adjusted Performance

OK

Over the last 90 days SPI Energy Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating basic indicators, SPI Energy demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diodes Incorporated and SPI Energy

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

The idea behind Diodes Incorporated and SPI Energy 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..