Correlation Between Advanced Micro and Semtech

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

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

Diversification Opportunities for Advanced Micro and Semtech

0.96

Correlation Coefficient

Advanced Micro  Semtech

Almost no diversification

The 3 months correlation between Advanced and Semtech is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech and Advanced Micro 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 Advanced Micro Devices are associated (or correlated) with Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Advanced Micro i.e., Advanced Micro and Semtech go up and down completely randomly.

Pair Corralation between Advanced Micro and Semtech

Considering the 90-day investment horizon Advanced Micro Devices is expected to generate 0.81 times more return on investment than Semtech. However, Advanced Micro Devices is 1.24 times less risky than Semtech. It trades about 0.34 of its potential returns per unit of risk. Semtech is currently generating about 0.19 per unit of risk. If you would invest  10,170  in Advanced Micro Devices on May 8, 2025 and sell it today you would earn a total of  7,261  from holding Advanced Micro Devices or generate 71.4% return on investment over 90 days.

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

Advanced Micro Devices  vs.  Semtech

Advanced Micro Devices

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Advanced Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Semtech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Micro and Semtech

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

The idea behind Advanced Micro Devices and Semtech 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.