Correlation Between Indie Semiconductor and Monolithic Power

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

By analyzing existing cross correlation between indie Semiconductor and Monolithic Power Systems, you can compare the effects of market volatilities on Indie Semiconductor and Monolithic Power 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 Monolithic Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indie Semiconductor and Monolithic Power.

Diversification Opportunities for Indie Semiconductor and Monolithic Power

0.28

Correlation Coefficient

Indie Semiconductor  Monolithic Power

Modest diversification

The 3 months correlation between Indie and Monolithic is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding indie Semiconductor and Monolithic Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monolithic Power Systems 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 Monolithic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monolithic Power Systems has no effect on the direction of Indie Semiconductor i.e., Indie Semiconductor and Monolithic Power go up and down completely randomly.

Pair Corralation between Indie Semiconductor and Monolithic Power

Given the investment horizon of 90 days indie Semiconductor is expected to under-perform the Monolithic Power. In addition to that, Indie Semiconductor is 1.4 times more volatile than Monolithic Power Systems. It trades about -0.17 of its total potential returns per unit of risk. Monolithic Power Systems is currently generating about 0.0 per unit of volatility. If you would invest  61,600  in Monolithic Power Systems on December 21, 2024 and sell it today you would lose (2,502) from holding Monolithic Power Systems or give up 4.06% of portfolio value over 90 days.

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

indie Semiconductor  vs.  Monolithic Power Systems

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.

Monolithic Power Systems

Risk-Adjusted Performance

Weak

Over the last 90 days Monolithic Power Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Monolithic Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Indie Semiconductor and Monolithic Power

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

The idea behind indie Semiconductor and Monolithic Power Systems 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.