Correlation Between Indie Semiconductor and Skywater Technology

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

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

Diversification Opportunities for Indie Semiconductor and Skywater Technology

-0.48

Correlation Coefficient

Indie Semiconductor  Skywater Technology

Very good diversification

The 3 months correlation between Indie and Skywater is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding indie Semiconductor and Skywater Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skywater Technology 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 Skywater Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skywater Technology has no effect on the direction of Indie Semiconductor i.e., Indie Semiconductor and Skywater Technology go up and down completely randomly.

Pair Corralation between Indie Semiconductor and Skywater Technology

Given the investment horizon of 90 days indie Semiconductor is expected to under-perform the Skywater Technology. In addition to that, Indie Semiconductor is 1.1 times more volatile than Skywater Technology. It trades about -0.01 of its total potential returns per unit of risk. Skywater Technology is currently generating about 0.12 per unit of volatility. If you would invest  748.00  in Skywater Technology on September 19, 2024 and sell it today you would earn a total of  874.00  from holding Skywater Technology or generate 116.84% return on investment over 90 days.

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

indie Semiconductor  vs.  Skywater Technology

indie Semiconductor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in indie Semiconductor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Indie Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Skywater Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Skywater Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Skywater Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indie Semiconductor and Skywater Technology

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

The idea behind indie Semiconductor and Skywater Technology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .