Correlation Between AXT and QuickLogic

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

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

Diversification Opportunities for AXT and QuickLogic

0.62

Correlation Coefficient

AXT  QuickLogic

Poor diversification

The 3 months correlation between AXT and QuickLogic is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AXT Inc and QuickLogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuickLogic and AXT 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 AXT Inc are associated (or correlated) with QuickLogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuickLogic has no effect on the direction of AXT i.e., AXT and QuickLogic go up and down completely randomly.

Pair Corralation between AXT and QuickLogic

Given the investment horizon of 90 days AXT is expected to generate 2.68 times less return on investment than QuickLogic. In addition to that, AXT is 1.52 times more volatile than QuickLogic. It trades about 0.01 of its total potential returns per unit of risk. QuickLogic is currently generating about 0.02 per unit of volatility. If you would invest  718.00  in QuickLogic on August 31, 2024 and sell it today you would earn a total of  45.00  from holding QuickLogic or generate 6.27% return on investment over 90 days.

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

AXT Inc  vs.  QuickLogic

AXT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

QuickLogic

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days QuickLogic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, QuickLogic is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AXT and QuickLogic

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

The idea behind AXT Inc and QuickLogic 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.