Correlation Between ON Semiconductor and Kopin

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

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

Diversification Opportunities for ON Semiconductor and Kopin

-0.55

Correlation Coefficient

ON Semiconductor  Kopin

Excellent diversification

The 3 months correlation between ON Semiconductor and Kopin is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ON Semiconductor and Kopin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopin 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 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 ON Semiconductor i.e., ON Semiconductor and Kopin go up and down completely randomly.

Pair Corralation between ON Semiconductor and Kopin

Allowing for the 90-day total investment horizon ON Semiconductor is expected to under-perform the Kopin. But the stock apears to be less risky and, when comparing its historical volatility, ON Semiconductor is 2.19 times less risky than Kopin. The stock trades about -0.12 of its potential returns per unit of risk. The Kopin is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  77.00  in Kopin on October 23, 2024 and sell it today you would earn a total of  45.00  from holding Kopin or generate 58.44% return on investment over 90 days.

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

ON Semiconductor  vs.  Kopin

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kopin

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kopin are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kopin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ON Semiconductor and Kopin

The main advantage of trading using opposite ON Semiconductor and Kopin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ON Semiconductor 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 ON Semiconductor 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .