Correlation Between Entegris and Indie Semiconductor

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

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

Diversification Opportunities for Entegris and Indie Semiconductor

-0.11

Correlation Coefficient

Entegris  Indie Semiconductor

Good diversification

The 3 months correlation between Entegris and Indie is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and indie Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on indie Semiconductor and Entegris 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 Entegris are associated (or correlated) with Indie Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of indie Semiconductor has no effect on the direction of Entegris i.e., Entegris and Indie Semiconductor go up and down completely randomly.

Pair Corralation between Entegris and Indie Semiconductor

Given the investment horizon of 90 days Entegris is expected to generate 0.41 times more return on investment than Indie Semiconductor. However, Entegris is 2.42 times less risky than Indie Semiconductor. It trades about 0.01 of its potential returns per unit of risk. indie Semiconductor is currently generating about -0.04 per unit of risk. If you would invest  9,996  in Entegris on September 21, 2024 and sell it today you would lose (50.00) from holding Entegris or give up 0.5% of portfolio value over 90 days.

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

Entegris  vs.  indie Semiconductor

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

indie Semiconductor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in indie Semiconductor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Indie Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entegris and Indie Semiconductor

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

The idea behind Entegris and indie Semiconductor 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.