Correlation Between CurrentC Power and AXT

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

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

Diversification Opportunities for CurrentC Power and AXT

-0.55

Correlation Coefficient

CurrentC Power  AXT

Excellent diversification

The 3 months correlation between CurrentC and AXT is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CurrentC Power and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc and CurrentC Power 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 CurrentC Power are associated (or correlated) with AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of CurrentC Power i.e., CurrentC Power and AXT go up and down completely randomly.

Pair Corralation between CurrentC Power and AXT

Given the investment horizon of 90 days CurrentC Power is expected to generate 9.68 times more return on investment than AXT. However, CurrentC Power is 9.68 times more volatile than AXT Inc. It trades about 0.16 of its potential returns per unit of risk. AXT Inc is currently generating about 0.16 per unit of risk. If you would invest  5.90  in CurrentC Power on April 30, 2025 and sell it today you would lose (4.70) from holding CurrentC Power or give up 79.66% of portfolio value over 90 days.

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

CurrentC Power  vs.  AXT Inc

CurrentC Power

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CurrentC Power are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, CurrentC Power showed solid returns over the last few months and may actually be approaching a breakup point.

AXT Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXT Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, AXT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CurrentC Power and AXT

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

The idea behind CurrentC Power and AXT Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.