Correlation Between MACOM Technology and Rohm Co
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Rohm Co 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 MACOM Technology and Rohm Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Rohm Co Ltd, you can compare the effects of market volatilities on MACOM Technology and Rohm Co 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 MACOM Technology with a short position of Rohm Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Rohm Co.
Diversification Opportunities for MACOM Technology and Rohm Co
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MACOM and Rohm is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Rohm Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rohm Co and MACOM Technology 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 MACOM Technology Solutions are associated (or correlated) with Rohm Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rohm Co has no effect on the direction of MACOM Technology i.e., MACOM Technology and Rohm Co go up and down completely randomly.
Pair Corralation between MACOM Technology and Rohm Co
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 0.96 times more return on investment than Rohm Co. However, MACOM Technology Solutions is 1.04 times less risky than Rohm Co. It trades about 0.11 of its potential returns per unit of risk. Rohm Co Ltd is currently generating about -0.07 per unit of risk. If you would invest 7,024 in MACOM Technology Solutions on August 25, 2024 and sell it today you would earn a total of 6,426 from holding MACOM Technology Solutions or generate 91.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Rohm Co Ltd
Performance |
| Timeline |
| MACOM Technology Sol |
| Rohm Co |
MACOM Technology and Rohm Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Rohm Co
The main advantage of trading using opposite MACOM Technology and Rohm Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Rohm Co 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 Rohm Co will offset losses from the drop in Rohm Co's long position.| MACOM Technology vs. Power Integrations | MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. Cirrus Logic | MACOM Technology vs. Amkor Technology |
| Rohm Co vs. Renesas Electronics | Rohm Co vs. Power Integrations | Rohm Co vs. MACOM Technology Solutions | Rohm Co vs. Renesas Electronics Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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