Correlation Between Wisekey International and MACOM Technology

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

By analyzing existing cross correlation between Wisekey International Holding and MACOM Technology Solutions, you can compare the effects of market volatilities on Wisekey International and MACOM Technology 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 Wisekey International with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisekey International and MACOM Technology.

Diversification Opportunities for Wisekey International and MACOM Technology

0.12

Correlation Coefficient

Wisekey International  MACOM Technology

Average diversification

The 3 months correlation between Wisekey and MACOM is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wisekey International Holding and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and Wisekey International 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 Wisekey International Holding are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of Wisekey International i.e., Wisekey International and MACOM Technology go up and down completely randomly.

Pair Corralation between Wisekey International and MACOM Technology

Given the investment horizon of 90 days Wisekey International Holding is expected to generate 5.03 times more return on investment than MACOM Technology. However, Wisekey International is 5.03 times more volatile than MACOM Technology Solutions. It trades about 0.12 of its potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.09 per unit of risk. If you would invest  211.00  in Wisekey International Holding on September 15, 2024 and sell it today you would earn a total of  573.00  from holding Wisekey International Holding or generate 271.56% return on investment over 90 days.

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

Wisekey International Holding  vs.  MACOM Technology Solutions

Wisekey International

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wisekey International Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Wisekey International showed solid returns over the last few months and may actually be approaching a breakup point.

MACOM Technology Sol

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, MACOM Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wisekey International and MACOM Technology

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

The idea behind Wisekey International Holding and MACOM Technology Solutions 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.