Correlation Between Weebit Nano and Sitime

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

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

Diversification Opportunities for Weebit Nano and Sitime

0.73

Correlation Coefficient

Weebit Nano  Sitime

Poor diversification

The 3 months correlation between Weebit and Sitime is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Weebit Nano Limited and Sitime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitime and Weebit Nano 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 Weebit Nano Limited are associated (or correlated) with Sitime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitime has no effect on the direction of Weebit Nano i.e., Weebit Nano and Sitime go up and down completely randomly.

Pair Corralation between Weebit Nano and Sitime

Assuming the 90 days horizon Weebit Nano is expected to generate 1.35 times less return on investment than Sitime. In addition to that, Weebit Nano is 1.78 times more volatile than Sitime. It trades about 0.03 of its total potential returns per unit of risk. Sitime is currently generating about 0.07 per unit of volatility. If you would invest  10,162  in Sitime on September 20, 2024 and sell it today you would earn a total of  14,684  from holding Sitime or generate 144.5% return on investment over 90 days.

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

Weebit Nano Limited  vs.  Sitime

Weebit Nano Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Weebit Nano Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Weebit Nano reported solid returns over the last few months and may actually be approaching a breakup point.

Sitime

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sitime are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Sitime displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Weebit Nano and Sitime

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

The idea behind Weebit Nano Limited and Sitime 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.