Correlation Between CEVA and Semtech
Can any of the company-specific risk be diversified away by investing in both CEVA and Semtech 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 CEVA and Semtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEVA Inc and Semtech, you can compare the effects of market volatilities on CEVA and Semtech 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 CEVA with a short position of Semtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEVA and Semtech.
Diversification Opportunities for CEVA and Semtech
Poor diversification
The 3 months correlation between CEVA and Semtech is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CEVA Inc and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech and CEVA 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 CEVA Inc are associated (or correlated) with Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of CEVA i.e., CEVA and Semtech go up and down completely randomly.
Pair Corralation between CEVA and Semtech
Given the investment horizon of 90 days CEVA Inc is expected to generate 1.08 times more return on investment than Semtech. However, CEVA is 1.08 times more volatile than Semtech. It trades about 0.26 of its potential returns per unit of risk. Semtech is currently generating about 0.22 per unit of risk. If you would invest 2,437 in CEVA Inc on August 27, 2024 and sell it today you would earn a total of 590.00 from holding CEVA Inc or generate 24.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEVA Inc vs. Semtech
Performance |
| Timeline |
| CEVA Inc |
| Semtech |
CEVA and Semtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEVA and Semtech
The main advantage of trading using opposite CEVA and Semtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEVA position performs unexpectedly, Semtech 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 Semtech will offset losses from the drop in Semtech's long position.| CEVA vs. MagnaChip Semiconductor | CEVA vs. MACOM Technology Solutions | CEVA vs. FormFactor | CEVA vs. MaxLinear |
| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
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.
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