Correlation Between Semtech and Know Labs

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

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

Diversification Opportunities for Semtech and Know Labs

0.57

Correlation Coefficient

Semtech  Know Labs

Very weak diversification

The 3 months correlation between Semtech and Know is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Know Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know Labs 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 Know Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know Labs has no effect on the direction of Semtech i.e., Semtech and Know Labs go up and down completely randomly.

Pair Corralation between Semtech and Know Labs

Given the investment horizon of 90 days Semtech is expected to generate 13.86 times less return on investment than Know Labs. But when comparing it to its historical volatility, Semtech is 9.79 times less risky than Know Labs. It trades about 0.12 of its potential returns per unit of risk. Know Labs is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  48.00  in Know Labs on May 14, 2025 and sell it today you would earn a total of  176.00  from holding Know Labs or generate 366.67% return on investment over 90 days.

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

Semtech  vs.  Know Labs

Semtech

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 9 (%) 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.

Know Labs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Know Labs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Know Labs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semtech and Know Labs

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

The idea behind Semtech and Know Labs 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.