Correlation Between Indie Semiconductor and SmartKem, Common

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

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

Diversification Opportunities for Indie Semiconductor and SmartKem, Common

0.33

Correlation Coefficient

Indie Semiconductor  SmartKem, Common

Weak diversification

The 3 months correlation between Indie and SmartKem, is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding indie Semiconductor and SmartKem, Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartKem, Common Stock and Indie 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 indie Semiconductor are associated (or correlated) with SmartKem, Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartKem, Common Stock has no effect on the direction of Indie Semiconductor i.e., Indie Semiconductor and SmartKem, Common go up and down completely randomly.

Pair Corralation between Indie Semiconductor and SmartKem, Common

Given the investment horizon of 90 days indie Semiconductor is expected to generate 0.66 times more return on investment than SmartKem, Common. However, indie Semiconductor is 1.52 times less risky than SmartKem, Common. It trades about 0.06 of its potential returns per unit of risk. SmartKem, Common Stock is currently generating about 0.01 per unit of risk. If you would invest  358.00  in indie Semiconductor on September 22, 2024 and sell it today you would earn a total of  52.00  from holding indie Semiconductor or generate 14.53% return on investment over 90 days.

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

indie Semiconductor  vs.  SmartKem, Common Stock

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.

SmartKem, Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SmartKem, Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite unfluctuating basic indicators, SmartKem, Common may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Indie Semiconductor and SmartKem, Common

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

The idea behind indie Semiconductor and SmartKem, Common Stock 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..