Correlation Between Power Integrations and AXT
Can any of the company-specific risk be diversified away by investing in both Power Integrations and AXT 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 Power Integrations and AXT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Integrations and AXT Inc, you can compare the effects of market volatilities on Power Integrations and AXT 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 Power Integrations with a short position of AXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Integrations and AXT.
Diversification Opportunities for Power Integrations and AXT
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Power and AXT is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc and Power Integrations 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 Power Integrations are associated (or correlated) with AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Power Integrations i.e., Power Integrations and AXT go up and down completely randomly.
Pair Corralation between Power Integrations and AXT
Given the investment horizon of 90 days Power Integrations is expected to generate 0.32 times more return on investment than AXT. However, Power Integrations is 3.12 times less risky than AXT. It trades about -0.06 of its potential returns per unit of risk. AXT Inc is currently generating about -0.04 per unit of risk. If you would invest 6,690 in Power Integrations on December 1, 2024 and sell it today you would lose (610.00) from holding Power Integrations or give up 9.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Power Integrations vs. AXT Inc
Performance |
Timeline |
Power Integrations |
AXT Inc |
Power Integrations and AXT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Power Integrations and AXT
The main advantage of trading using opposite Power Integrations and AXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Integrations position performs unexpectedly, AXT 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 AXT will offset losses from the drop in AXT's long position.Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations vs. Amkor Technology |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |