Correlation Between 4DS Memory and Power Integrations

Can any of the company-specific risk be diversified away by investing in both 4DS Memory and Power Integrations 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 4DS Memory and Power Integrations into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4DS Memory Limited and Power Integrations, you can compare the effects of market volatilities on 4DS Memory and Power Integrations 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 4DS Memory with a short position of Power Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4DS Memory and Power Integrations.

Diversification Opportunities for 4DS Memory and Power Integrations

0.0

Correlation Coefficient

4DS Memory  Power Integrations

Pay attention - limited upside

The 3 months correlation between 4DS and Power is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding 4DS Memory Limited and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations and 4DS Memory 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 4DS Memory Limited are associated (or correlated) with Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of 4DS Memory i.e., 4DS Memory and Power Integrations go up and down completely randomly.

Pair Corralation between 4DS Memory and Power Integrations

If you would invest  6,039  in Power Integrations on September 19, 2024 and sell it today you would earn a total of  467.00  from holding Power Integrations or generate 7.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

4DS Memory Limited  vs.  Power Integrations

4DS Memory Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4DS Memory Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, 4DS Memory is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Power Integrations

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Power Integrations are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Power Integrations may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 4DS Memory and Power Integrations

The main advantage of trading using opposite 4DS Memory and Power Integrations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4DS Memory position performs unexpectedly, Power Integrations 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 Power Integrations will offset losses from the drop in Power Integrations' long position.

The idea behind 4DS Memory Limited and Power Integrations 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.