Correlation Between ProShares Ultra and Himax Technologies

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

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

Diversification Opportunities for ProShares Ultra and Himax Technologies

-0.27

Correlation Coefficient

ProShares Ultra  Himax Technologies

Very good diversification

The 3 months correlation between ProShares and Himax is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Himax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himax Technologies and ProShares Ultra 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 ProShares Ultra Semiconductors are associated (or correlated) with Himax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Himax Technologies has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Himax Technologies go up and down completely randomly.

Pair Corralation between ProShares Ultra and Himax Technologies

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the Himax Technologies. In addition to that, ProShares Ultra is 2.74 times more volatile than Himax Technologies. It trades about -0.21 of its total potential returns per unit of risk. Himax Technologies is currently generating about -0.2 per unit of volatility. If you would invest  534.00  in Himax Technologies on January 26, 2024 and sell it today you would lose (38.00) from holding Himax Technologies or give up 7.12% of portfolio value over 90 days.

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

ProShares Ultra Semiconductors  vs.  Himax Technologies

ProShares Ultra Semi

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Semiconductors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ProShares Ultra exhibited solid returns over the last few months and may actually be approaching a breakup point.

Himax Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Himax Technologies 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 primary indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ProShares Ultra and Himax Technologies

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

The idea behind ProShares Ultra Semiconductors and Himax Technologies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.