Correlation Between Indie Semiconductor and Teradyne

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

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

Diversification Opportunities for Indie Semiconductor and Teradyne

-0.42

Correlation Coefficient

Indie Semiconductor  Teradyne

Very good diversification

The 3 months correlation between Indie and Teradyne is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding indie Semiconductor and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Indie Semiconductor i.e., Indie Semiconductor and Teradyne go up and down completely randomly.

Pair Corralation between Indie Semiconductor and Teradyne

Given the investment horizon of 90 days indie Semiconductor is expected to generate 3.68 times more return on investment than Teradyne. However, Indie Semiconductor is 3.68 times more volatile than Teradyne. It trades about 0.06 of its potential returns per unit of risk. Teradyne is currently generating about -0.04 per unit of risk. If you would invest  391.00  in indie Semiconductor on September 13, 2024 and sell it today you would earn a total of  60.00  from holding indie Semiconductor or generate 15.35% 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.  Teradyne

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.

Teradyne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teradyne has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Indie Semiconductor and Teradyne

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

The idea behind indie Semiconductor and Teradyne 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.