Correlation Between Synaptics Incorporated and SemiLEDS

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

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

Diversification Opportunities for Synaptics Incorporated and SemiLEDS

0.52

Correlation Coefficient

Synaptics Incorporated  SemiLEDS

Very weak diversification

The 3 months correlation between Synaptics and SemiLEDS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Synaptics Incorporated and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS and Synaptics Incorporated 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 Synaptics Incorporated are associated (or correlated) with SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of Synaptics Incorporated i.e., Synaptics Incorporated and SemiLEDS go up and down completely randomly.

Pair Corralation between Synaptics Incorporated and SemiLEDS

Given the investment horizon of 90 days Synaptics Incorporated is expected to generate 9.0 times less return on investment than SemiLEDS. But when comparing it to its historical volatility, Synaptics Incorporated is 2.47 times less risky than SemiLEDS. It trades about 0.01 of its potential returns per unit of risk. SemiLEDS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  127.00  in SemiLEDS on September 19, 2024 and sell it today you would earn a total of  4.00  from holding SemiLEDS or generate 3.15% return on investment over 90 days.

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

Synaptics Incorporated  vs.  SemiLEDS

Synaptics Incorporated

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Synaptics Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Synaptics Incorporated is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SemiLEDS

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SemiLEDS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, SemiLEDS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Synaptics Incorporated and SemiLEDS

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

The idea behind Synaptics Incorporated and SemiLEDS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.