Correlation Between SemiLEDS and WiSA Technologies

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

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

Diversification Opportunities for SemiLEDS and WiSA Technologies

0.61

Correlation Coefficient

SemiLEDS  WiSA Technologies

Poor diversification

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

Pair Corralation between SemiLEDS and WiSA Technologies

Given the investment horizon of 90 days SemiLEDS is expected to generate 0.3 times more return on investment than WiSA Technologies. However, SemiLEDS is 3.3 times less risky than WiSA Technologies. It trades about -0.15 of its potential returns per unit of risk. WiSA Technologies is currently generating about -0.3 per unit of risk. If you would invest  148.00  in SemiLEDS on March 5, 2024 and sell it today you would lose (15.00) from holding SemiLEDS or give up 10.14% of portfolio value over 90 days.

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

SemiLEDS  vs.  WiSA Technologies

SemiLEDS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SemiLEDS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

WiSA Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WiSA Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, WiSA Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SemiLEDS and WiSA Technologies

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

The idea behind SemiLEDS and WiSA Technologies 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.