Correlation Between AIXTRON SE and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both AIXTRON SE and Tokyo Electron 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 AIXTRON SE and Tokyo Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIXTRON SE and Tokyo Electron, you can compare the effects of market volatilities on AIXTRON SE and Tokyo Electron 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 AIXTRON SE with a short position of Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIXTRON SE and Tokyo Electron.
Diversification Opportunities for AIXTRON SE and Tokyo Electron
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AIXTRON and Tokyo is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding AIXTRON SE and Tokyo Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron and AIXTRON SE 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 AIXTRON SE are associated (or correlated) with Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of AIXTRON SE i.e., AIXTRON SE and Tokyo Electron go up and down completely randomly.
Pair Corralation between AIXTRON SE and Tokyo Electron
Assuming the 90 days horizon AIXTRON SE is expected to under-perform the Tokyo Electron. But the pink sheet apears to be less risky and, when comparing its historical volatility, AIXTRON SE is 1.21 times less risky than Tokyo Electron. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Tokyo Electron is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 15,486 in Tokyo Electron on October 22, 2024 and sell it today you would earn a total of 1,278 from holding Tokyo Electron or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIXTRON SE vs. Tokyo Electron
Performance |
| Timeline |
| AIXTRON SE |
| Tokyo Electron |
AIXTRON SE and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIXTRON SE and Tokyo Electron
The main advantage of trading using opposite AIXTRON SE and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIXTRON SE position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.| AIXTRON SE vs. Sumco Corp ADR | AIXTRON SE vs. Disco Corp ADR | AIXTRON SE vs. Tokyo Electron | AIXTRON SE vs. Asm Pacific Technology |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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