Correlation Between Indie Semiconductor and Cyberlux Corp

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

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

Diversification Opportunities for Indie Semiconductor and Cyberlux Corp

0.64

Correlation Coefficient

Indie Semiconductor  Cyberlux Corp

Poor diversification

The 3 months correlation between Indie and Cyberlux is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding indie Semiconductor and Cyberlux Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyberlux Corp and Indie Semiconductor 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 indie Semiconductor are associated (or correlated) with Cyberlux Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyberlux Corp has no effect on the direction of Indie Semiconductor i.e., Indie Semiconductor and Cyberlux Corp go up and down completely randomly.

Pair Corralation between Indie Semiconductor and Cyberlux Corp

Given the investment horizon of 90 days indie Semiconductor is expected to under-perform the Cyberlux Corp. But the stock apears to be less risky and, when comparing its historical volatility, indie Semiconductor is 1.66 times less risky than Cyberlux Corp. The stock trades about -0.16 of its potential returns per unit of risk. The Cyberlux Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  0.68  in Cyberlux Corp on December 20, 2024 and sell it today you would lose (0.27) from holding Cyberlux Corp or give up 39.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

indie Semiconductor  vs.  Cyberlux Corp

indie Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days indie Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cyberlux Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cyberlux Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Indie Semiconductor and Cyberlux Corp

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

The idea behind indie Semiconductor and Cyberlux Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.