Correlation Between AXT and SemiLEDS
Can any of the company-specific risk be diversified away by investing in both AXT and SemiLEDS 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 AXT and SemiLEDS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXT Inc and SemiLEDS, you can compare the effects of market volatilities on AXT and SemiLEDS 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 AXT with a short position of SemiLEDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXT and SemiLEDS.
Diversification Opportunities for AXT and SemiLEDS
Modest diversification
The 3 months correlation between AXT and SemiLEDS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AXT Inc and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS and AXT 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 AXT Inc are associated (or correlated) with SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of AXT i.e., AXT and SemiLEDS go up and down completely randomly.
Pair Corralation between AXT and SemiLEDS
Given the investment horizon of 90 days AXT Inc is expected to generate 1.17 times more return on investment than SemiLEDS. However, AXT is 1.17 times more volatile than SemiLEDS. It trades about 0.19 of its potential returns per unit of risk. SemiLEDS is currently generating about -0.03 per unit of risk. If you would invest 142.00 in AXT Inc on April 25, 2025 and sell it today you would earn a total of 110.00 from holding AXT Inc or generate 77.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AXT Inc vs. SemiLEDS
Performance |
Timeline |
AXT Inc |
SemiLEDS |
AXT and SemiLEDS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AXT and SemiLEDS
The main advantage of trading using opposite AXT and SemiLEDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXT position performs unexpectedly, SemiLEDS 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 SemiLEDS will offset losses from the drop in SemiLEDS's long position.The idea behind AXT Inc and SemiLEDS 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.SemiLEDS vs. Nano Labs | SemiLEDS vs. ChipMOS Technologies | SemiLEDS vs. Wisekey International Holding | SemiLEDS vs. Silicon Motion 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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