Correlation Between Microchip Technology and Kopin

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

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

Diversification Opportunities for Microchip Technology and Kopin

-0.09

Correlation Coefficient

Microchip Technology  Kopin

Good diversification

The 3 months correlation between Microchip and Kopin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology and Kopin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopin and Microchip Technology 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 Microchip Technology are associated (or correlated) with Kopin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopin has no effect on the direction of Microchip Technology i.e., Microchip Technology and Kopin go up and down completely randomly.

Pair Corralation between Microchip Technology and Kopin

Given the investment horizon of 90 days Microchip Technology is expected to generate 0.39 times more return on investment than Kopin. However, Microchip Technology is 2.57 times less risky than Kopin. It trades about -0.05 of its potential returns per unit of risk. Kopin is currently generating about -0.07 per unit of risk. If you would invest  5,669  in Microchip Technology on December 29, 2024 and sell it today you would lose (590.00) from holding Microchip Technology or give up 10.41% of portfolio value over 90 days.

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

Microchip Technology  vs.  Kopin

Microchip Technology

Risk-Adjusted Performance

Very Weak

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

Kopin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kopin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Microchip Technology and Kopin

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

The idea behind Microchip Technology and Kopin 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.