Correlation Between Indie Semiconductor and FormFactor

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

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

Diversification Opportunities for Indie Semiconductor and FormFactor

0.83

Correlation Coefficient

Indie Semiconductor  FormFactor

Very poor diversification

The 3 months correlation between Indie and FormFactor is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding indie Semiconductor and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor and Indie Semiconductor 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 indie Semiconductor are associated (or correlated) with FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Indie Semiconductor i.e., Indie Semiconductor and FormFactor go up and down completely randomly.

Pair Corralation between Indie Semiconductor and FormFactor

Given the investment horizon of 90 days indie Semiconductor is expected to generate 1.63 times more return on investment than FormFactor. However, Indie Semiconductor is 1.63 times more volatile than FormFactor. It trades about 0.22 of its potential returns per unit of risk. FormFactor is currently generating about -0.01 per unit of risk. If you would invest  201.00  in indie Semiconductor on May 3, 2025 and sell it today you would earn a total of  190.00  from holding indie Semiconductor or generate 94.53% return on investment over 90 days.

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

indie Semiconductor  vs.  FormFactor

indie Semiconductor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in indie Semiconductor are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental indicators, Indie Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

FormFactor

Risk-Adjusted Performance

Very Weak

Over the last 90 days FormFactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FormFactor is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Indie Semiconductor and FormFactor

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

The idea behind indie Semiconductor and FormFactor 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.