Correlation Between Himax Technologies and SemiLEDS

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

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

Diversification Opportunities for Himax Technologies and SemiLEDS

-0.17

Correlation Coefficient

Himax Technologies  SemiLEDS

Good diversification

The 3 months correlation between Himax and SemiLEDS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Himax Technologies and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS and Himax Technologies 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 Himax Technologies are associated (or correlated) with SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of Himax Technologies i.e., Himax Technologies and SemiLEDS go up and down completely randomly.

Pair Corralation between Himax Technologies and SemiLEDS

Given the investment horizon of 90 days Himax Technologies is expected to generate 0.42 times more return on investment than SemiLEDS. However, Himax Technologies is 2.4 times less risky than SemiLEDS. It trades about 0.15 of its potential returns per unit of risk. SemiLEDS is currently generating about 0.02 per unit of risk. If you would invest  542.00  in Himax Technologies on September 12, 2024 and sell it today you would earn a total of  139.00  from holding Himax Technologies or generate 25.65% return on investment over 90 days.

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

Himax Technologies  vs.  SemiLEDS

Himax Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Himax Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Himax Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

SemiLEDS

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SemiLEDS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, SemiLEDS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Himax Technologies and SemiLEDS

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

The idea behind Himax Technologies and SemiLEDS 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.