Correlation Between Applied Opt and Ichor Holdings
Can any of the company-specific risk be diversified away by investing in both Applied Opt and Ichor Holdings 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 Applied Opt and Ichor Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Opt and Ichor Holdings, you can compare the effects of market volatilities on Applied Opt and Ichor Holdings 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 Applied Opt with a short position of Ichor Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Opt and Ichor Holdings.
Diversification Opportunities for Applied Opt and Ichor Holdings
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Ichor is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Applied Opt and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Holdings and Applied Opt 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 Applied Opt are associated (or correlated) with Ichor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Holdings has no effect on the direction of Applied Opt i.e., Applied Opt and Ichor Holdings go up and down completely randomly.
Pair Corralation between Applied Opt and Ichor Holdings
Given the investment horizon of 90 days Applied Opt is expected to under-perform the Ichor Holdings. In addition to that, Applied Opt is 2.42 times more volatile than Ichor Holdings. It trades about -0.16 of its total potential returns per unit of risk. Ichor Holdings is currently generating about -0.18 per unit of volatility. If you would invest 3,222 in Ichor Holdings on November 1, 2024 and sell it today you would lose (359.50) from holding Ichor Holdings or give up 11.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Opt vs. Ichor Holdings
Performance |
| Timeline |
| Applied Opt |
| Ichor Holdings |
Applied Opt and Ichor Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Opt and Ichor Holdings
The main advantage of trading using opposite Applied Opt and Ichor Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Opt position performs unexpectedly, Ichor Holdings 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 Ichor Holdings will offset losses from the drop in Ichor Holdings' long position.| Applied Opt vs. Lumentum Holdings | Applied Opt vs. Ichor Holdings | Applied Opt vs. Fabrinet | Applied Opt vs. Hello Group |
| Ichor Holdings vs. Diodes Incorporated | Ichor Holdings vs. Daqo New Energy | Ichor Holdings vs. Micron Technology | Ichor Holdings vs. MagnaChip Semiconductor |
Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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