Correlation Between Lattice Semiconductor and CEVA

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

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

Diversification Opportunities for Lattice Semiconductor and CEVA

0.26

Correlation Coefficient

Lattice Semiconductor  CEVA

Modest diversification

The 3 months correlation between Lattice and CEVA is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and CEVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEVA Inc and Lattice 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 Lattice Semiconductor are associated (or correlated) with CEVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEVA Inc has no effect on the direction of Lattice Semiconductor i.e., Lattice Semiconductor and CEVA go up and down completely randomly.

Pair Corralation between Lattice Semiconductor and CEVA

Given the investment horizon of 90 days Lattice Semiconductor is expected to generate 0.69 times more return on investment than CEVA. However, Lattice Semiconductor is 1.46 times less risky than CEVA. It trades about 0.0 of its potential returns per unit of risk. CEVA Inc is currently generating about -0.06 per unit of risk. If you would invest  5,672  in Lattice Semiconductor on December 28, 2024 and sell it today you would lose (142.00) from holding Lattice Semiconductor or give up 2.5% of portfolio value over 90 days.

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

Lattice Semiconductor  vs.  CEVA Inc

Lattice Semiconductor

Risk-Adjusted Performance

Insignificant

Over the last 90 days Lattice Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lattice Semiconductor is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CEVA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CEVA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lattice Semiconductor and CEVA

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

The idea behind Lattice Semiconductor and CEVA Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.