Correlation Between ON Semiconductor and IX Acquisition

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

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

Diversification Opportunities for ON Semiconductor and IX Acquisition

-0.08

Correlation Coefficient

ON Semiconductor  IX Acquisition

Good diversification

The 3 months correlation between ON Semiconductor and IXAQU is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ON Semiconductor and IX Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IX Acquisition Corp and ON 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 ON Semiconductor are associated (or correlated) with IX Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IX Acquisition Corp has no effect on the direction of ON Semiconductor i.e., ON Semiconductor and IX Acquisition go up and down completely randomly.

Pair Corralation between ON Semiconductor and IX Acquisition

Allowing for the 90-day total investment horizon ON Semiconductor is expected to under-perform the IX Acquisition. In addition to that, ON Semiconductor is 17.22 times more volatile than IX Acquisition Corp. It trades about -0.03 of its total potential returns per unit of risk. IX Acquisition Corp is currently generating about -0.2 per unit of volatility. If you would invest  1,149  in IX Acquisition Corp on September 15, 2024 and sell it today you would lose (8.00) from holding IX Acquisition Corp or give up 0.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.06%
Values	Daily Returns

ON Semiconductor  vs.  IX Acquisition Corp

ON Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ON Semiconductor is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

IX Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IX Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IX Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ON Semiconductor and IX Acquisition

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

The idea behind ON Semiconductor and IX Acquisition Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.