Correlation Between Rambus and SemiLEDS

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

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

Diversification Opportunities for Rambus and SemiLEDS

0.51

Correlation Coefficient

Rambus  SemiLEDS

Very weak diversification

The 3 months correlation between Rambus and SemiLEDS is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Rambus Inc and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS and Rambus 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 Rambus Inc are associated (or correlated) with SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of Rambus i.e., Rambus and SemiLEDS go up and down completely randomly.

Pair Corralation between Rambus and SemiLEDS

Assuming the 90 days horizon Rambus Inc is expected to generate 0.54 times more return on investment than SemiLEDS. However, Rambus Inc is 1.86 times less risky than SemiLEDS. It trades about 0.26 of its potential returns per unit of risk. SemiLEDS is currently generating about 0.06 per unit of risk. If you would invest  3,796  in Rambus Inc on April 21, 2025 and sell it today you would earn a total of  2,112  from holding Rambus Inc or generate 55.64% return on investment over 90 days.

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

Rambus Inc  vs.  SemiLEDS

Rambus Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rambus Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Rambus reported solid returns over the last few months and may actually be approaching a breakup point.

SemiLEDS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SemiLEDS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, SemiLEDS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rambus and SemiLEDS

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

The idea behind Rambus Inc and SemiLEDS 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.