Correlation Between SemiLEDS and Lattice Semiconductor

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Can any of the company-specific risk be diversified away by investing in both SemiLEDS and Lattice 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 SemiLEDS and Lattice Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SemiLEDS and Lattice Semiconductor, you can compare the effects of market volatilities on SemiLEDS and Lattice 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 SemiLEDS with a short position of Lattice Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SemiLEDS and Lattice Semiconductor.

Diversification Opportunities for SemiLEDS and Lattice Semiconductor

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between SemiLEDS and Lattice is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SemiLEDS and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and SemiLEDS 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 SemiLEDS are associated (or correlated) with Lattice Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lattice Semiconductor has no effect on the direction of SemiLEDS i.e., SemiLEDS and Lattice Semiconductor go up and down completely randomly.

Pair Corralation between SemiLEDS and Lattice Semiconductor

Given the investment horizon of 90 days SemiLEDS is expected to generate 2.38 times more return on investment than Lattice Semiconductor. However, SemiLEDS is 2.38 times more volatile than Lattice Semiconductor. It trades about 0.06 of its potential returns per unit of risk. Lattice Semiconductor is currently generating about 0.13 per unit of risk. If you would invest  130.00  in SemiLEDS on September 17, 2024 and sell it today you would earn a total of  18.00  from holding SemiLEDS or generate 13.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SemiLEDS  vs.  Lattice Semiconductor

 Performance 
       Timeline  
SemiLEDS 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SemiLEDS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, SemiLEDS unveiled solid returns over the last few months and may actually be approaching a breakup point.
Lattice Semiconductor 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Lattice Semiconductor exhibited solid returns over the last few months and may actually be approaching a breakup point.

SemiLEDS and Lattice Semiconductor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SemiLEDS and Lattice Semiconductor

The main advantage of trading using opposite SemiLEDS and Lattice Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SemiLEDS position performs unexpectedly, Lattice 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 Lattice Semiconductor will offset losses from the drop in Lattice Semiconductor's long position.
The idea behind SemiLEDS and Lattice 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.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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