Correlation Between SemiLEDS and Silicon Laboratories

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

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

Diversification Opportunities for SemiLEDS and Silicon Laboratories

0.16

Correlation Coefficient

SemiLEDS  Silicon Laboratories

Average diversification

The 3 months correlation between SemiLEDS and Silicon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SemiLEDS and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories 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 Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of SemiLEDS i.e., SemiLEDS and Silicon Laboratories go up and down completely randomly.

Pair Corralation between SemiLEDS and Silicon Laboratories

Given the investment horizon of 90 days SemiLEDS is expected to under-perform the Silicon Laboratories. In addition to that, SemiLEDS is 2.18 times more volatile than Silicon Laboratories. It trades about -0.06 of its total potential returns per unit of risk. Silicon Laboratories is currently generating about 0.0 per unit of volatility. If you would invest  13,297  in Silicon Laboratories on May 14, 2025 and sell it today you would lose (210.00) from holding Silicon Laboratories or give up 1.58% of portfolio value over 90 days.

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

SemiLEDS  vs.  Silicon Laboratories

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.

Silicon Laboratories

Risk-Adjusted Performance

Weakest

Over the last 90 days Silicon Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Silicon Laboratories is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SemiLEDS and Silicon Laboratories

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

The idea behind SemiLEDS and Silicon Laboratories 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.