Correlation Between AXT and Lattice Semiconductor
Can any of the company-specific risk be diversified away by investing in both AXT and Lattice Semiconductor 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 AXT and Lattice Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXT Inc and Lattice Semiconductor, you can compare the effects of market volatilities on AXT and Lattice Semiconductor 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 AXT with a short position of Lattice Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXT and Lattice Semiconductor.
Diversification Opportunities for AXT and Lattice Semiconductor
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between AXT and Lattice is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding AXT Inc and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and AXT 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 AXT Inc are associated (or correlated) with Lattice Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lattice Semiconductor has no effect on the direction of AXT i.e., AXT and Lattice Semiconductor go up and down completely randomly.
Pair Corralation between AXT and Lattice Semiconductor
Given the investment horizon of 90 days AXT Inc is expected to under-perform the Lattice Semiconductor. In addition to that, AXT is 3.15 times more volatile than Lattice Semiconductor. It trades about -0.07 of its total potential returns per unit of risk. Lattice Semiconductor is currently generating about 0.16 per unit of volatility. If you would invest 5,636 in Lattice Semiconductor on November 30, 2024 and sell it today you would earn a total of 598.00 from holding Lattice Semiconductor or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXT Inc vs. Lattice Semiconductor
Performance |
| Timeline |
| AXT Inc |
| Lattice Semiconductor |
AXT and Lattice Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXT and Lattice Semiconductor
The main advantage of trading using opposite AXT and Lattice Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXT position performs unexpectedly, Lattice Semiconductor 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 Lattice Semiconductor will offset losses from the drop in Lattice Semiconductor's long position.The idea behind AXT Inc and Lattice Semiconductor 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.| Lattice Semiconductor vs. Qorvo Inc | ||
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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