Correlation Between Sitime and Lattice Semiconductor

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

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

Diversification Opportunities for Sitime and Lattice Semiconductor

-0.42

Correlation Coefficient

Sitime  Lattice Semiconductor

Very good diversification

The 3 months correlation between Sitime and Lattice is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sitime and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and Sitime 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 Sitime are associated (or correlated) with Lattice Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lattice Semiconductor has no effect on the direction of Sitime i.e., Sitime and Lattice Semiconductor go up and down completely randomly.

Pair Corralation between Sitime and Lattice Semiconductor

Given the investment horizon of 90 days Sitime is expected to under-perform the Lattice Semiconductor. In addition to that, Sitime is 2.2 times more volatile than Lattice Semiconductor. It trades about -0.06 of its total potential returns per unit of risk. Lattice Semiconductor is currently generating about 0.0 per unit of volatility. If you would invest  5,672  in Lattice Semiconductor on December 29, 2024 and sell it today you would lose (142.00) from holding Lattice Semiconductor or give up 2.5% of portfolio value over 90 days.

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

Sitime  vs.  Lattice Semiconductor

Sitime

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sitime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lattice Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lattice Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lattice Semiconductor is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sitime and Lattice Semiconductor

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

The idea behind Sitime and Lattice Semiconductor 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .