Correlation Between Lattice Semiconductor and SemiLEDS

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

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

Diversification Opportunities for Lattice Semiconductor and SemiLEDS

0.49

Correlation Coefficient

Lattice Semiconductor  SemiLEDS

Very weak diversification

The 3 months correlation between Lattice and SemiLEDS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS 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 SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of Lattice Semiconductor i.e., Lattice Semiconductor and SemiLEDS go up and down completely randomly.

Pair Corralation between Lattice Semiconductor and SemiLEDS

Given the investment horizon of 90 days Lattice Semiconductor is expected to generate 2.23 times less return on investment than SemiLEDS. But when comparing it to its historical volatility, Lattice Semiconductor is 1.67 times less risky than SemiLEDS. It trades about 0.01 of its potential returns per unit of risk. SemiLEDS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  182.00  in SemiLEDS on September 24, 2024 and sell it today you would lose (50.00) from holding SemiLEDS or give up 27.47% of portfolio value over 90 days.

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

Lattice Semiconductor  vs.  SemiLEDS

Lattice Semiconductor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Lattice Semiconductor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SemiLEDS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SemiLEDS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, SemiLEDS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lattice Semiconductor and SemiLEDS

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

The idea behind Lattice Semiconductor and SemiLEDS 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.