Correlation Between NXP Semiconductors and Camtek

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

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

Diversification Opportunities for NXP Semiconductors and Camtek

0.62

Correlation Coefficient

NXP Semiconductors  Camtek

Poor diversification

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

Pair Corralation between NXP Semiconductors and Camtek

Given the investment horizon of 90 days NXP Semiconductors NV is expected to generate 0.59 times more return on investment than Camtek. However, NXP Semiconductors NV is 1.71 times less risky than Camtek. It trades about -0.02 of its potential returns per unit of risk. Camtek is currently generating about -0.04 per unit of risk. If you would invest  23,510  in NXP Semiconductors NV on August 31, 2024 and sell it today you would lose (857.00) from holding NXP Semiconductors NV or give up 3.65% of portfolio value over 90 days.

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

NXP Semiconductors NV  vs.  Camtek

NXP Semiconductors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NXP Semiconductors NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, NXP Semiconductors is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Camtek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camtek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NXP Semiconductors and Camtek

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

The idea behind NXP Semiconductors NV and Camtek 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .