Correlation Between Chart Industries and ON Semiconductor

Can any of the company-specific risk be diversified away by investing in both Chart Industries and ON Semiconductor 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 Chart Industries and ON Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chart Industries and ON Semiconductor, you can compare the effects of market volatilities on Chart Industries and ON Semiconductor 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 Chart Industries with a short position of ON Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and ON Semiconductor.

Diversification Opportunities for Chart Industries and ON Semiconductor

-0.37

Correlation Coefficient

Chart Industries  ON Semiconductor

Very good diversification

The 3 months correlation between Chart and ON Semiconductor is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor and Chart Industries 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 Chart Industries are associated (or correlated) with ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of Chart Industries i.e., Chart Industries and ON Semiconductor go up and down completely randomly.

Pair Corralation between Chart Industries and ON Semiconductor

Given the investment horizon of 90 days Chart Industries is expected to under-perform the ON Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Chart Industries is 1.61 times less risky than ON Semiconductor. The stock trades about -0.26 of its potential returns per unit of risk. The ON Semiconductor is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  7,355  in ON Semiconductor on January 28, 2024 and sell it today you would lose (549.00) from holding ON Semiconductor or give up 7.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chart Industries  vs.  ON Semiconductor

Chart Industries

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

ON Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ON Semiconductor is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Chart Industries and ON Semiconductor

The main advantage of trading using opposite Chart Industries and ON Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chart Industries position performs unexpectedly, ON Semiconductor 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 ON Semiconductor will offset losses from the drop in ON Semiconductor's long position.

The idea behind Chart Industries and ON Semiconductor 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.