Correlation Between Wisekey International and Credo Technology

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

By analyzing existing cross correlation between Wisekey International Holding and Credo Technology Group, you can compare the effects of market volatilities on Wisekey International and Credo Technology 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 Wisekey International with a short position of Credo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisekey International and Credo Technology.

Diversification Opportunities for Wisekey International and Credo Technology

0.41

Correlation Coefficient

Wisekey International  Credo Technology

Very weak diversification

The 3 months correlation between Wisekey and Credo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Wisekey International Holding and Credo Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credo Technology and Wisekey International 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 Wisekey International Holding are associated (or correlated) with Credo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credo Technology has no effect on the direction of Wisekey International i.e., Wisekey International and Credo Technology go up and down completely randomly.

Pair Corralation between Wisekey International and Credo Technology

Given the investment horizon of 90 days Wisekey International Holding is expected to generate 2.74 times more return on investment than Credo Technology. However, Wisekey International is 2.74 times more volatile than Credo Technology Group. It trades about 0.19 of its potential returns per unit of risk. Credo Technology Group is currently generating about 0.26 per unit of risk. If you would invest  229.00  in Wisekey International Holding on September 18, 2024 and sell it today you would earn a total of  971.00  from holding Wisekey International Holding or generate 424.02% return on investment over 90 days.

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

Wisekey International Holding  vs.  Credo Technology Group

Wisekey International

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wisekey International Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Wisekey International showed solid returns over the last few months and may actually be approaching a breakup point.

Credo Technology

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Credo Technology Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Credo Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wisekey International and Credo Technology

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

The idea behind Wisekey International Holding and Credo Technology Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.