Correlation Between Semtech and Quantum EMotion

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

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

Diversification Opportunities for Semtech and Quantum EMotion

0.61

Correlation Coefficient

Semtech  Quantum EMotion

Poor diversification

The 3 months correlation between Semtech and Quantum is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Quantum eMotion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum eMotion and Semtech 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 Semtech are associated (or correlated) with Quantum EMotion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum eMotion has no effect on the direction of Semtech i.e., Semtech and Quantum EMotion go up and down completely randomly.

Pair Corralation between Semtech and Quantum EMotion

Given the investment horizon of 90 days Semtech is expected to generate 4.65 times less return on investment than Quantum EMotion. But when comparing it to its historical volatility, Semtech is 5.04 times less risky than Quantum EMotion. It trades about 0.24 of its potential returns per unit of risk. Quantum eMotion is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Quantum eMotion on October 22, 2024 and sell it today you would earn a total of  25.00  from holding Quantum eMotion or generate 65.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Semtech  vs.  Quantum eMotion

Semtech

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Quantum eMotion

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum eMotion are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Quantum EMotion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semtech and Quantum EMotion

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

The idea behind Semtech and Quantum eMotion 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.