Correlation Between Himax Technologies and Diodes Incorporated

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

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

Diversification Opportunities for Himax Technologies and Diodes Incorporated

0.92

Correlation Coefficient

Himax Technologies  Diodes Incorporated

Almost no diversification

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

Pair Corralation between Himax Technologies and Diodes Incorporated

Given the investment horizon of 90 days Himax Technologies is expected to generate 1.28 times less return on investment than Diodes Incorporated. But when comparing it to its historical volatility, Himax Technologies is 1.21 times less risky than Diodes Incorporated. It trades about 0.14 of its potential returns per unit of risk. Diodes Incorporated is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,871  in Diodes Incorporated on May 6, 2025 and sell it today you would earn a total of  1,020  from holding Diodes Incorporated or generate 26.35% return on investment over 90 days.

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

Himax Technologies  vs.  Diodes Incorporated

Himax Technologies

Risk-Adjusted Performance

Good

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

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.

Pair Trading with Himax Technologies and Diodes Incorporated

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

The idea behind Himax Technologies and Diodes 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.