Correlation Between Power Integrations and Pixelworks

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

By analyzing existing cross correlation between Power Integrations and Pixelworks, you can compare the effects of market volatilities on Power Integrations and Pixelworks 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 Pixelworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Integrations and Pixelworks.

Diversification Opportunities for Power Integrations and Pixelworks

0.54

Correlation Coefficient

Power Integrations  Pixelworks

Very weak diversification

The 3 months correlation between Power and Pixelworks is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations and Pixelworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pixelworks 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 Pixelworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pixelworks has no effect on the direction of Power Integrations i.e., Power Integrations and Pixelworks go up and down completely randomly.

Pair Corralation between Power Integrations and Pixelworks

Given the investment horizon of 90 days Power Integrations is expected to under-perform the Pixelworks. But the stock apears to be less risky and, when comparing its historical volatility, Power Integrations is 1.72 times less risky than Pixelworks. The stock trades about -0.11 of its potential returns per unit of risk. The Pixelworks is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Pixelworks on December 29, 2024 and sell it today you would lose (12.00) from holding Pixelworks or give up 15.79% of portfolio value over 90 days.

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

Power Integrations  vs.  Pixelworks

Power Integrations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Integrations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic 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.

Pixelworks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pixelworks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Power Integrations and Pixelworks

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

The idea behind Power Integrations and Pixelworks 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.