Correlation Between Allkem and Semtech

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

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

Diversification Opportunities for Allkem and Semtech

0.0

Correlation Coefficient

Allkem  Semtech

Pay attention - limited upside

The 3 months correlation between Allkem and Semtech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Allkem and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech and Allkem 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 Allkem are associated (or correlated) with Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Allkem i.e., Allkem and Semtech go up and down completely randomly.

Pair Corralation between Allkem and Semtech

If you would invest (100.00) in Allkem on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Allkem or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Allkem  vs.  Semtech

Allkem

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allkem has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Allkem is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Semtech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Semtech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Allkem and Semtech

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

The idea behind Allkem and Semtech 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.