Correlation Between Navitas Semiconductor and POET Technologies

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

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

Diversification Opportunities for Navitas Semiconductor and POET Technologies

0.85

Correlation Coefficient

Navitas Semiconductor  POET Technologies

Very poor diversification

The 3 months correlation between Navitas and POET is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Navitas Semiconductor Corp and POET Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POET Technologies and Navitas 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 Navitas Semiconductor Corp are associated (or correlated) with POET Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POET Technologies has no effect on the direction of Navitas Semiconductor i.e., Navitas Semiconductor and POET Technologies go up and down completely randomly.

Pair Corralation between Navitas Semiconductor and POET Technologies

Given the investment horizon of 90 days Navitas Semiconductor Corp is expected to under-perform the POET Technologies. In addition to that, Navitas Semiconductor is 1.21 times more volatile than POET Technologies. It trades about -0.11 of its total potential returns per unit of risk. POET Technologies is currently generating about -0.1 per unit of volatility. If you would invest  636.00  in POET Technologies on December 28, 2024 and sell it today you would lose (232.00) from holding POET Technologies or give up 36.48% of portfolio value over 90 days.

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

Navitas Semiconductor Corp  vs.  POET Technologies

Navitas Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Navitas Semiconductor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

POET Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days POET Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Navitas Semiconductor and POET Technologies

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

The idea behind Navitas Semiconductor Corp and POET 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.