Correlation Between POET Technologies and Lattice Semiconductor

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

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

Diversification Opportunities for POET Technologies and Lattice Semiconductor

0.38

Correlation Coefficient

POET Technologies  Lattice Semiconductor

Weak diversification

The 3 months correlation between POET and Lattice is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding POET Technologies and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and POET Technologies 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 POET Technologies are associated (or correlated) with Lattice Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lattice Semiconductor has no effect on the direction of POET Technologies i.e., POET Technologies and Lattice Semiconductor go up and down completely randomly.

Pair Corralation between POET Technologies and Lattice Semiconductor

Given the investment horizon of 90 days POET Technologies is expected to generate 3.07 times more return on investment than Lattice Semiconductor. However, POET Technologies is 3.07 times more volatile than Lattice Semiconductor. It trades about 0.21 of its potential returns per unit of risk. Lattice Semiconductor is currently generating about 0.05 per unit of risk. If you would invest  377.00  in POET Technologies on October 7, 2024 and sell it today you would earn a total of  298.00  from holding POET Technologies or generate 79.05% return on investment over 90 days.

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

POET Technologies  vs.  Lattice Semiconductor

POET Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POET Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, POET Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lattice Semiconductor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Lattice Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with POET Technologies and Lattice Semiconductor

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

The idea behind POET Technologies and Lattice 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.