Correlation Between Aehr Test and Photronics
Can any of the company-specific risk be diversified away by investing in both Aehr Test and Photronics 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 Aehr Test and Photronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aehr Test Systems and Photronics, you can compare the effects of market volatilities on Aehr Test and Photronics 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 Aehr Test with a short position of Photronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aehr Test and Photronics.
Diversification Opportunities for Aehr Test and Photronics
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aehr and Photronics is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aehr Test Systems and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics and Aehr Test 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 Aehr Test Systems are associated (or correlated) with Photronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photronics has no effect on the direction of Aehr Test i.e., Aehr Test and Photronics go up and down completely randomly.
Pair Corralation between Aehr Test and Photronics
Given the investment horizon of 90 days Aehr Test Systems is expected to under-perform the Photronics. In addition to that, Aehr Test is 1.87 times more volatile than Photronics. It trades about -0.26 of its total potential returns per unit of risk. Photronics is currently generating about 0.09 per unit of volatility. If you would invest 2,392 in Photronics on August 27, 2024 and sell it today you would earn a total of 97.00 from holding Photronics or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aehr Test Systems vs. Photronics
Performance |
| Timeline |
| Aehr Test Systems |
| Photronics |
Aehr Test and Photronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aehr Test and Photronics
The main advantage of trading using opposite Aehr Test and Photronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aehr Test position performs unexpectedly, Photronics 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 Photronics will offset losses from the drop in Photronics' long position.The idea behind Aehr Test Systems and Photronics 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.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Commodity Directory Find actively traded commodities issued by global exchanges |