Correlation Between Analog Devices and Amkor Technology
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Amkor Technology 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 Analog Devices and Amkor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Amkor Technology, you can compare the effects of market volatilities on Analog Devices and Amkor Technology 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 Analog Devices with a short position of Amkor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Amkor Technology.
Diversification Opportunities for Analog Devices and Amkor Technology
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Analog and Amkor is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Analog Devices 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 Analog Devices are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of Analog Devices i.e., Analog Devices and Amkor Technology go up and down completely randomly.
Pair Corralation between Analog Devices and Amkor Technology
Considering the 90-day investment horizon Analog Devices is expected to generate 0.83 times more return on investment than Amkor Technology. However, Analog Devices is 1.2 times less risky than Amkor Technology. It trades about -0.05 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.16 per unit of risk. If you would invest 23,014 in Analog Devices on August 28, 2024 and sell it today you would lose (656.00) from holding Analog Devices or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Amkor Technology
Performance |
| Timeline |
| Analog Devices |
| Amkor Technology |
Analog Devices and Amkor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Amkor Technology
The main advantage of trading using opposite Analog Devices and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Amkor Technology 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 Amkor Technology will offset losses from the drop in Amkor Technology's long position.The idea behind Analog Devices and Amkor Technology 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.| Amkor Technology vs. Power Integrations | Amkor Technology vs. Diodes Incorporated | Amkor Technology vs. MACOM Technology Solutions | Amkor Technology vs. Cirrus Logic |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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