Correlation Between Rohm Co and Power Integrations
Can any of the company-specific risk be diversified away by investing in both Rohm Co and Power Integrations 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 Rohm Co and Power Integrations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rohm Co Ltd and Power Integrations, you can compare the effects of market volatilities on Rohm Co and Power Integrations 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 Rohm Co with a short position of Power Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rohm Co and Power Integrations.
Diversification Opportunities for Rohm Co and Power Integrations
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Rohm and Power is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Rohm Co Ltd and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations and Rohm Co 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 Rohm Co Ltd are associated (or correlated) with Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of Rohm Co i.e., Rohm Co and Power Integrations go up and down completely randomly.
Pair Corralation between Rohm Co and Power Integrations
Assuming the 90 days horizon Rohm Co Ltd is expected to generate 1.31 times more return on investment than Power Integrations. However, Rohm Co is 1.31 times more volatile than Power Integrations. It trades about 0.15 of its potential returns per unit of risk. Power Integrations is currently generating about 0.0 per unit of risk. If you would invest 907.00 in Rohm Co Ltd on October 24, 2024 and sell it today you would earn a total of 54.00 from holding Rohm Co Ltd or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rohm Co Ltd vs. Power Integrations
Performance |
| Timeline |
| Rohm Co |
| Power Integrations |
Rohm Co and Power Integrations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rohm Co and Power Integrations
The main advantage of trading using opposite Rohm Co and Power Integrations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rohm Co position performs unexpectedly, Power Integrations 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 Power Integrations will offset losses from the drop in Power Integrations' long position.| Rohm Co vs. Renesas Electronics | Rohm Co vs. Power Integrations | Rohm Co vs. MACOM Technology Solutions | Rohm Co vs. Renesas Electronics Corp |
| Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations vs. Amkor Technology |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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