Correlation Between ON Semiconductor and Acm Research

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

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

Diversification Opportunities for ON Semiconductor and Acm Research

0.4

Correlation Coefficient

ON Semiconductor  Acm Research

Very weak diversification

The 3 months correlation between ON Semiconductor and Acm is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ON Semiconductor and Acm Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acm Research and ON 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 ON Semiconductor are associated (or correlated) with Acm Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acm Research has no effect on the direction of ON Semiconductor i.e., ON Semiconductor and Acm Research go up and down completely randomly.

Pair Corralation between ON Semiconductor and Acm Research

Allowing for the 90-day total investment horizon ON Semiconductor is expected to generate 0.7 times more return on investment than Acm Research. However, ON Semiconductor is 1.42 times less risky than Acm Research. It trades about 0.0 of its potential returns per unit of risk. Acm Research is currently generating about -0.05 per unit of risk. If you would invest  7,073  in ON Semiconductor on September 15, 2024 and sell it today you would lose (477.00) from holding ON Semiconductor or give up 6.74% of portfolio value over 90 days.

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

ON Semiconductor  vs.  Acm Research

ON Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ON Semiconductor is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Acm Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acm Research has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Acm Research is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ON Semiconductor and Acm Research

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

The idea behind ON Semiconductor and Acm Research 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.