Correlation Between Diodes Incorporated and Synaptics Incorporated

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

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

Diversification Opportunities for Diodes Incorporated and Synaptics Incorporated

0.92

Correlation Coefficient

Diodes Incorporated  Synaptics Incorporated

Almost no diversification

The 3 months correlation between Diodes and Synaptics is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Diodes Incorporated and Synaptics Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synaptics Incorporated and Diodes Incorporated 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 Diodes Incorporated are associated (or correlated) with Synaptics Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synaptics Incorporated has no effect on the direction of Diodes Incorporated i.e., Diodes Incorporated and Synaptics Incorporated go up and down completely randomly.

Pair Corralation between Diodes Incorporated and Synaptics Incorporated

Given the investment horizon of 90 days Diodes Incorporated is expected to generate 1.16 times more return on investment than Synaptics Incorporated. However, Diodes Incorporated is 1.16 times more volatile than Synaptics Incorporated. It trades about 0.15 of its potential returns per unit of risk. Synaptics Incorporated is currently generating about 0.06 per unit of risk. If you would invest  3,921  in Diodes Incorporated on May 7, 2025 and sell it today you would earn a total of  1,025  from holding Diodes Incorporated or generate 26.14% return on investment over 90 days.

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

Diodes Incorporated  vs.  Synaptics Incorporated

Diodes Incorporated

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Diodes Incorporated are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Diodes Incorporated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Synaptics Incorporated

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Synaptics Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Synaptics Incorporated may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Diodes Incorporated and Synaptics Incorporated

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

The idea behind Diodes Incorporated and Synaptics Incorporated 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.