Correlation Between SemiLEDS and Synaptics Incorporated

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

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

Diversification Opportunities for SemiLEDS and Synaptics Incorporated

0.52

Correlation Coefficient

SemiLEDS  Synaptics Incorporated

Very weak diversification

The 3 months correlation between SemiLEDS and Synaptics is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SemiLEDS and Synaptics Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synaptics Incorporated and SemiLEDS 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 SemiLEDS are associated (or correlated) with Synaptics Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synaptics Incorporated has no effect on the direction of SemiLEDS i.e., SemiLEDS and Synaptics Incorporated go up and down completely randomly.

Pair Corralation between SemiLEDS and Synaptics Incorporated

Given the investment horizon of 90 days SemiLEDS is expected to generate 1.9 times more return on investment than Synaptics Incorporated. However, SemiLEDS is 1.9 times more volatile than Synaptics Incorporated. It trades about 0.02 of its potential returns per unit of risk. Synaptics Incorporated is currently generating about 0.0 per unit of risk. If you would invest  161.00  in SemiLEDS on September 19, 2024 and sell it today you would lose (32.00) from holding SemiLEDS or give up 19.88% of portfolio value over 90 days.

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

SemiLEDS  vs.  Synaptics Incorporated

SemiLEDS

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SemiLEDS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, SemiLEDS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Synaptics Incorporated

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Synaptics Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Synaptics Incorporated is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SemiLEDS and Synaptics Incorporated

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

The idea behind SemiLEDS and Synaptics Incorporated 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.