Correlation Between AXT and Pixelworks
Can any of the company-specific risk be diversified away by investing in both AXT and Pixelworks 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 Pixelworks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXT Inc and Pixelworks, you can compare the effects of market volatilities on AXT and Pixelworks 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 Pixelworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXT and Pixelworks.
Diversification Opportunities for AXT and Pixelworks
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AXT and Pixelworks is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding AXT Inc and Pixelworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pixelworks 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 Pixelworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pixelworks has no effect on the direction of AXT i.e., AXT and Pixelworks go up and down completely randomly.
Pair Corralation between AXT and Pixelworks
Given the investment horizon of 90 days AXT Inc is expected to generate 2.37 times more return on investment than Pixelworks. However, AXT is 2.37 times more volatile than Pixelworks. It trades about -0.07 of its potential returns per unit of risk. Pixelworks is currently generating about -0.19 per unit of risk. If you would invest 208.00 in AXT Inc on November 30, 2024 and sell it today you would lose (48.00) from holding AXT Inc or give up 23.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXT Inc vs. Pixelworks
Performance |
| Timeline |
| AXT Inc |
| Pixelworks |
AXT and Pixelworks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXT and Pixelworks
The main advantage of trading using opposite AXT and Pixelworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXT position performs unexpectedly, Pixelworks 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 Pixelworks will offset losses from the drop in Pixelworks' long position.The idea behind AXT Inc and Pixelworks 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |