Correlation Between Wisekey International and Xperi Corp

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

Diversification Opportunities for Wisekey International and Xperi Corp

0.61

Correlation Coefficient

Wisekey International  Xperi Corp

Poor diversification

The 3 months correlation between Wisekey and Xperi is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wisekey International Holding and Xperi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xperi Corp 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 Xperi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xperi Corp has no effect on the direction of Wisekey International i.e., Wisekey International and Xperi Corp go up and down completely randomly.

Pair Corralation between Wisekey International and Xperi Corp

Given the investment horizon of 90 days Wisekey International Holding is expected to generate 12.51 times more return on investment than Xperi Corp. However, Wisekey International is 12.51 times more volatile than Xperi Corp. It trades about 0.29 of its potential returns per unit of risk. Xperi Corp is currently generating about 0.46 per unit of risk. If you would invest  197.00  in Wisekey International Holding on September 19, 2024 and sell it today you would earn a total of  573.00  from holding Wisekey International Holding or generate 290.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Wisekey International Holding  vs.  Xperi Corp

Wisekey International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wisekey International Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Wisekey International showed solid returns over the last few months and may actually be approaching a breakup point.

Xperi Corp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xperi Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Xperi Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wisekey International and Xperi Corp

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

The idea behind Wisekey International Holding and Xperi Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.