Correlation Between Semtech and Alpha

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

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

Diversification Opportunities for Semtech and Alpha

0.96

Correlation Coefficient

Semtech  Alpha

Almost no diversification

The 3 months correlation between Semtech and Alpha is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Alpha and Omega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha and Omega and Semtech 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 Semtech are associated (or correlated) with Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha and Omega has no effect on the direction of Semtech i.e., Semtech and Alpha go up and down completely randomly.

Pair Corralation between Semtech and Alpha

Given the investment horizon of 90 days Semtech is expected to generate 0.99 times more return on investment than Alpha. However, Semtech is 1.01 times less risky than Alpha. It trades about 0.28 of its potential returns per unit of risk. Alpha and Omega is currently generating about 0.19 per unit of risk. If you would invest  3,119  in Semtech on April 29, 2025 and sell it today you would earn a total of  2,188  from holding Semtech or generate 70.15% return on investment over 90 days.

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

Semtech  vs.  Alpha and Omega

Semtech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alpha and Omega

Risk-Adjusted Performance

Good

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

Pair Trading with Semtech and Alpha

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

The idea behind Semtech and Alpha and Omega 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 Global Correlations module to find global opportunities by holding instruments from different markets.