Correlation Between ON SEMICONDUCTOR and 11880 Solutions

Can any of the company-specific risk be diversified away by investing in both ON SEMICONDUCTOR and 11880 Solutions 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 ON SEMICONDUCTOR and 11880 Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ON SEMICONDUCTOR and 11880 Solutions AG, you can compare the effects of market volatilities on ON SEMICONDUCTOR and 11880 Solutions 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 ON SEMICONDUCTOR with a short position of 11880 Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of ON SEMICONDUCTOR and 11880 Solutions.

Diversification Opportunities for ON SEMICONDUCTOR and 11880 Solutions

0.05

Correlation Coefficient

ON SEMICONDUCTOR  11880 Solutions

Significant diversification

The 3 months correlation between XS4 and 11880 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR and 11880 Solutions AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 11880 Solutions AG and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR are associated (or correlated) with 11880 Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 11880 Solutions AG has no effect on the direction of ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and 11880 Solutions go up and down completely randomly.

Pair Corralation between ON SEMICONDUCTOR and 11880 Solutions

Assuming the 90 days trading horizon ON SEMICONDUCTOR is expected to under-perform the 11880 Solutions. But the stock apears to be less risky and, when comparing its historical volatility, ON SEMICONDUCTOR is 1.76 times less risky than 11880 Solutions. The stock trades about -0.01 of its potential returns per unit of risk. The 11880 Solutions AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  80.00  in 11880 Solutions AG on October 10, 2024 and sell it today you would lose (1.00) from holding 11880 Solutions AG or give up 1.25% of portfolio value over 90 days.

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

ON SEMICONDUCTOR  vs.  11880 Solutions AG

ON SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON SEMICONDUCTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ON SEMICONDUCTOR is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

11880 Solutions AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 11880 Solutions AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, 11880 Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ON SEMICONDUCTOR and 11880 Solutions

The main advantage of trading using opposite ON SEMICONDUCTOR and 11880 Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ON SEMICONDUCTOR position performs unexpectedly, 11880 Solutions 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 11880 Solutions will offset losses from the drop in 11880 Solutions' long position.

The idea behind ON SEMICONDUCTOR and 11880 Solutions AG 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.