Correlation Between SemiLEDS and Ambarella

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

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

Diversification Opportunities for SemiLEDS and Ambarella

-0.19

Correlation Coefficient

SemiLEDS  Ambarella

Good diversification

The 3 months correlation between SemiLEDS and Ambarella is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SemiLEDS and Ambarella in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambarella and SemiLEDS 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 SemiLEDS are associated (or correlated) with Ambarella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambarella has no effect on the direction of SemiLEDS i.e., SemiLEDS and Ambarella go up and down completely randomly.

Pair Corralation between SemiLEDS and Ambarella

Given the investment horizon of 90 days SemiLEDS is expected to under-perform the Ambarella. In addition to that, SemiLEDS is 1.23 times more volatile than Ambarella. It trades about -0.04 of its total potential returns per unit of risk. Ambarella is currently generating about 0.17 per unit of volatility. If you would invest  4,714  in Ambarella on April 29, 2025 and sell it today you would earn a total of  2,130  from holding Ambarella or generate 45.18% return on investment over 90 days.

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

SemiLEDS  vs.  Ambarella

SemiLEDS

Risk-Adjusted Performance

Very Weak

Over the last 90 days SemiLEDS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ambarella

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ambarella are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Ambarella sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SemiLEDS and Ambarella

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

The idea behind SemiLEDS and Ambarella 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.