Correlation Between InTest and Indie Semiconductor

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

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

Diversification Opportunities for InTest and Indie Semiconductor

0.41

Correlation Coefficient

InTest  Indie Semiconductor

Very weak diversification

The 3 months correlation between InTest and Indie is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding inTest and indie Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on indie Semiconductor and InTest 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 inTest are associated (or correlated) with Indie Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of indie Semiconductor has no effect on the direction of InTest i.e., InTest and Indie Semiconductor go up and down completely randomly.

Pair Corralation between InTest and Indie Semiconductor

Given the investment horizon of 90 days InTest is expected to generate 2.84 times less return on investment than Indie Semiconductor. But when comparing it to its historical volatility, inTest is 2.62 times less risky than Indie Semiconductor. It trades about 0.06 of its potential returns per unit of risk. indie Semiconductor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  415.00  in indie Semiconductor on August 30, 2024 and sell it today you would earn a total of  88.00  from holding indie Semiconductor or generate 21.2% return on investment over 90 days.

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

inTest  vs.  indie Semiconductor

inTest

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in inTest are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, InTest unveiled solid returns over the last few months and may actually be approaching a breakup point.

indie Semiconductor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in indie Semiconductor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Indie Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InTest and Indie Semiconductor

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

The idea behind inTest and indie Semiconductor 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.