Correlation Between ITM Semiconductor and LIG-ES SPAC

Can any of the company-specific risk be diversified away by investing in both ITM Semiconductor and LIG-ES SPAC 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 ITM Semiconductor and LIG-ES SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ITM Semiconductor Co and LIG ES SPAC, you can compare the effects of market volatilities on ITM Semiconductor and LIG-ES SPAC 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 ITM Semiconductor with a short position of LIG-ES SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Semiconductor and LIG-ES SPAC.

Diversification Opportunities for ITM Semiconductor and LIG-ES SPAC

0.89

Correlation Coefficient

ITM Semiconductor  LIG-ES SPAC

Very poor diversification

The 3 months correlation between ITM and LIG-ES is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ITM Semiconductor Co and LIG ES SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIG ES SPAC and ITM 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 ITM Semiconductor Co are associated (or correlated) with LIG-ES SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIG ES SPAC has no effect on the direction of ITM Semiconductor i.e., ITM Semiconductor and LIG-ES SPAC go up and down completely randomly.

Pair Corralation between ITM Semiconductor and LIG-ES SPAC

Assuming the 90 days trading horizon ITM Semiconductor Co is expected to under-perform the LIG-ES SPAC. But the stock apears to be less risky and, when comparing its historical volatility, ITM Semiconductor Co is 1.27 times less risky than LIG-ES SPAC. The stock trades about -0.38 of its potential returns per unit of risk. The LIG ES SPAC is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest  501,000  in LIG ES SPAC on September 13, 2024 and sell it today you would lose (183,000) from holding LIG ES SPAC or give up 36.53% of portfolio value over 90 days.

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

ITM Semiconductor Co  vs.  LIG ES SPAC

ITM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITM Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

LIG ES SPAC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIG ES SPAC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ITM Semiconductor and LIG-ES SPAC

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

The idea behind ITM Semiconductor Co and LIG ES SPAC 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 CEOs Directory module to screen CEOs from public companies around the world.