Correlation Between Pixelworks and Navitas Semiconductor

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

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

Diversification Opportunities for Pixelworks and Navitas Semiconductor

0.24

Correlation Coefficient

Pixelworks  Navitas Semiconductor

Modest diversification

The 3 months correlation between Pixelworks and Navitas is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pixelworks and Navitas Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navitas Semiconductor and Pixelworks 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 Pixelworks are associated (or correlated) with Navitas Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navitas Semiconductor has no effect on the direction of Pixelworks i.e., Pixelworks and Navitas Semiconductor go up and down completely randomly.

Pair Corralation between Pixelworks and Navitas Semiconductor

Given the investment horizon of 90 days Pixelworks is expected to under-perform the Navitas Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Pixelworks is 2.76 times less risky than Navitas Semiconductor. The stock trades about -0.13 of its potential returns per unit of risk. The Navitas Semiconductor Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  278.00  in Navitas Semiconductor Corp on September 26, 2024 and sell it today you would earn a total of  108.00  from holding Navitas Semiconductor Corp or generate 38.85% return on investment over 90 days.

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

Pixelworks  vs.  Navitas Semiconductor Corp

Pixelworks

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pixelworks are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Pixelworks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Navitas Semiconductor

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Navitas Semiconductor Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Navitas Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pixelworks and Navitas Semiconductor

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

The idea behind Pixelworks and Navitas Semiconductor Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.