Correlation Between Pixelworks and Power Integrations

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

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

Diversification Opportunities for Pixelworks and Power Integrations

0.46

Correlation Coefficient

Pixelworks  Power Integrations

Very weak diversification

The 3 months correlation between Pixelworks and Power is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pixelworks and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations 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 Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of Pixelworks i.e., Pixelworks and Power Integrations go up and down completely randomly.

Pair Corralation between Pixelworks and Power Integrations

Given the investment horizon of 90 days Pixelworks is expected to generate 1.72 times more return on investment than Power Integrations. However, Pixelworks is 1.72 times more volatile than Power Integrations. It trades about -0.04 of its potential returns per unit of risk. Power Integrations is currently generating about -0.11 per unit of risk. 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

Pixelworks  vs.  Power Integrations

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.

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.

Pair Trading with Pixelworks and Power Integrations

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

The idea behind Pixelworks and Power Integrations 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.