Correlation Between Wisekey International and Power Integrations

Can any of the company-specific risk be diversified away by investing in both Wisekey International and Power Integrations 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 Power Integrations 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 Power Integrations, you can compare the effects of market volatilities on Wisekey International and Power Integrations 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 Power Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisekey International and Power Integrations.

Diversification Opportunities for Wisekey International and Power Integrations

0.01

Correlation Coefficient

Wisekey International  Power Integrations

Significant diversification

The 3 months correlation between Wisekey and Power is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wisekey International Holding and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations 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 Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of Wisekey International i.e., Wisekey International and Power Integrations go up and down completely randomly.

Pair Corralation between Wisekey International and Power Integrations

Given the investment horizon of 90 days Wisekey International Holding is expected to generate 9.59 times more return on investment than Power Integrations. However, Wisekey International is 9.59 times more volatile than Power Integrations. It trades about 0.19 of its potential returns per unit of risk. Power Integrations is currently generating about 0.0 per unit of risk. If you would invest  232.00  in Wisekey International Holding on September 29, 2024 and sell it today you would earn a total of  899.00  from holding Wisekey International Holding or generate 387.5% return on investment over 90 days.

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

Wisekey International Holding  vs.  Power Integrations

Wisekey International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wisekey International Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Wisekey International showed solid returns over the last few months and may actually be approaching a breakup point.

Power Integrations

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Wisekey International and Power Integrations

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

The idea behind Wisekey International Holding and Power Integrations 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.