Correlation Between Power Integrations and Sequans Communications
Can any of the company-specific risk be diversified away by investing in both Power Integrations and Sequans Communications 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 Power Integrations and Sequans Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Integrations and Sequans Communications SA, you can compare the effects of market volatilities on Power Integrations and Sequans Communications 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 Power Integrations with a short position of Sequans Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Integrations and Sequans Communications.
Diversification Opportunities for Power Integrations and Sequans Communications
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Power and Sequans is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations and Sequans Communications SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequans Communications and Power Integrations 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 Power Integrations are associated (or correlated) with Sequans Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequans Communications has no effect on the direction of Power Integrations i.e., Power Integrations and Sequans Communications go up and down completely randomly.
Pair Corralation between Power Integrations and Sequans Communications
Given the investment horizon of 90 days Power Integrations is expected to generate 2.69 times less return on investment than Sequans Communications. But when comparing it to its historical volatility, Power Integrations is 1.65 times less risky than Sequans Communications. It trades about 0.17 of its potential returns per unit of risk. Sequans Communications SA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 240.00 in Sequans Communications SA on September 1, 2024 and sell it today you would earn a total of 58.00 from holding Sequans Communications SA or generate 24.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Integrations vs. Sequans Communications SA
Performance |
| Timeline |
| Power Integrations |
| Sequans Communications |
Power Integrations and Sequans Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Integrations and Sequans Communications
The main advantage of trading using opposite Power Integrations and Sequans Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Integrations position performs unexpectedly, Sequans Communications 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 Sequans Communications will offset losses from the drop in Sequans Communications' long position.| Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations vs. Amkor Technology |
| Sequans Communications vs. QuickLogic | Sequans Communications vs. Power Integrations | Sequans Communications vs. Silicon Laboratories | Sequans Communications vs. FormFactor |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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