Correlation Between Photronics and Indie Semiconductor

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

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

Diversification Opportunities for Photronics and Indie Semiconductor

0.85

Correlation Coefficient

Photronics  Indie Semiconductor

Very poor diversification

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

Pair Corralation between Photronics and Indie Semiconductor

Given the investment horizon of 90 days Photronics is expected to generate 0.35 times more return on investment than Indie Semiconductor. However, Photronics is 2.84 times less risky than Indie Semiconductor. It trades about -0.11 of its potential returns per unit of risk. indie Semiconductor is currently generating about -0.18 per unit of risk. If you would invest  2,352  in Photronics on December 30, 2024 and sell it today you would lose (292.00) from holding Photronics or give up 12.41% of portfolio value over 90 days.

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

Photronics  vs.  indie Semiconductor

Photronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Photronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

indie Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days indie Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Photronics and Indie Semiconductor

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

The idea behind Photronics and indie Semiconductor 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.