Correlation Between Ambarella and ChipMOS Technologies

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

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

Diversification Opportunities for Ambarella and ChipMOS Technologies

0.73

Correlation Coefficient

Ambarella  ChipMOS Technologies

Poor diversification

The 3 months correlation between Ambarella and ChipMOS is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ambarella and ChipMOS Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipMOS Technologies and Ambarella 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 Ambarella are associated (or correlated) with ChipMOS Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipMOS Technologies has no effect on the direction of Ambarella i.e., Ambarella and ChipMOS Technologies go up and down completely randomly.

Pair Corralation between Ambarella and ChipMOS Technologies

Given the investment horizon of 90 days Ambarella is expected to generate 2.02 times more return on investment than ChipMOS Technologies. However, Ambarella is 2.02 times more volatile than ChipMOS Technologies. It trades about 0.22 of its potential returns per unit of risk. ChipMOS Technologies is currently generating about 0.19 per unit of risk. If you would invest  4,146  in Ambarella on April 20, 2025 and sell it today you would earn a total of  2,792  from holding Ambarella or generate 67.34% return on investment over 90 days.

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

Ambarella  vs.  ChipMOS Technologies

Ambarella

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ambarella are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Ambarella sustained solid returns over the last few months and may actually be approaching a breakup point.

ChipMOS Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ChipMOS Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ChipMOS Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambarella and ChipMOS Technologies

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

The idea behind Ambarella and ChipMOS Technologies 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.