Correlation Between Applied Materials and Amkor Technology
Can any of the company-specific risk be diversified away by investing in both Applied Materials 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 Applied Materials and Amkor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Amkor Technology, you can compare the effects of market volatilities on Applied Materials 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 Applied Materials with a short position of Amkor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Amkor Technology.
Diversification Opportunities for Applied Materials and Amkor Technology
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Amkor is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Applied Materials 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 Materials 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 Applied Materials i.e., Applied Materials and Amkor Technology go up and down completely randomly.
Pair Corralation between Applied Materials and Amkor Technology
Given the investment horizon of 90 days Applied Materials is expected to generate 1.08 times more return on investment than Amkor Technology. However, Applied Materials is 1.08 times more volatile than Amkor Technology. It trades about -0.09 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.21 per unit of risk. If you would invest 18,608 in Applied Materials on August 26, 2024 and sell it today you would lose (1,120) from holding Applied Materials or give up 6.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Amkor Technology
Performance |
| Timeline |
| Applied Materials |
| Amkor Technology |
Applied Materials and Amkor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Amkor Technology
The main advantage of trading using opposite Applied Materials and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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.| Applied Materials vs. KLA Tencor | Applied Materials vs. ASML Holding NV | Applied Materials vs. Axcelis Technologies | Applied Materials vs. Teradyne |
| Amkor Technology vs. Teradyne | Amkor Technology vs. IPG Photonics | Amkor Technology vs. Applied Materials |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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