Correlation Between Power Integrations and SGH Old

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

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

Diversification Opportunities for Power Integrations and SGH Old

0.0

Correlation Coefficient

Power Integrations  SGH Old

Pay attention - limited upside

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

Pair Corralation between Power Integrations and SGH Old

If you would invest (100.00) in SGH Old on December 27, 2024 and sell it today you would earn a total of  100.00  from holding SGH Old 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

Power Integrations  vs.  SGH Old

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 latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

SGH Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days SGH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, SGH Old is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Power Integrations and SGH Old

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

The idea behind Power Integrations and SGH Old 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.