Correlation Between SemiLEDS and AXT

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

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

Diversification Opportunities for SemiLEDS and AXT

-0.4

Correlation Coefficient

SemiLEDS  AXT

Very good diversification

The 3 months correlation between SemiLEDS and AXT is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SemiLEDS and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc 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 AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of SemiLEDS i.e., SemiLEDS and AXT go up and down completely randomly.

Pair Corralation between SemiLEDS and AXT

Given the investment horizon of 90 days SemiLEDS is expected to under-perform the AXT. But the stock apears to be less risky and, when comparing its historical volatility, SemiLEDS is 1.17 times less risky than AXT. The stock trades about -0.09 of its potential returns per unit of risk. The AXT Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  154.00  in AXT Inc on May 26, 2025 and sell it today you would earn a total of  128.00  from holding AXT Inc or generate 83.12% return on investment over 90 days.

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

SemiLEDS  vs.  AXT Inc

SemiLEDS

Risk-Adjusted Performance

Weakest

Over the last 90 days SemiLEDS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AXT Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXT Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, AXT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SemiLEDS and AXT

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

The idea behind SemiLEDS and AXT Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.