Correlation Between MaxLinear and Himax Technologies

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

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

Diversification Opportunities for MaxLinear and Himax Technologies

0.03

Correlation Coefficient

MaxLinear  Himax Technologies

Significant diversification

The 3 months correlation between MaxLinear and Himax is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MaxLinear and Himax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himax Technologies and MaxLinear 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 MaxLinear are associated (or correlated) with Himax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Himax Technologies has no effect on the direction of MaxLinear i.e., MaxLinear and Himax Technologies go up and down completely randomly.

Pair Corralation between MaxLinear and Himax Technologies

Considering the 90-day investment horizon MaxLinear is expected to under-perform the Himax Technologies. But the stock apears to be less risky and, when comparing its historical volatility, MaxLinear is 1.23 times less risky than Himax Technologies. The stock trades about -0.15 of its potential returns per unit of risk. The Himax Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  812.00  in Himax Technologies on December 29, 2024 and sell it today you would lose (58.00) from holding Himax Technologies or give up 7.14% of portfolio value over 90 days.

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

MaxLinear  vs.  Himax Technologies

MaxLinear

Risk-Adjusted Performance

Very Weak

Over the last 90 days MaxLinear 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 quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Himax Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Himax Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Himax Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MaxLinear and Himax Technologies

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

The idea behind MaxLinear and Himax Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.