Correlation Between Amkor Technology and BASF SE
Can any of the company-specific risk be diversified away by investing in both Amkor Technology and BASF SE 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 Amkor Technology and BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amkor Technology and BASF SE, you can compare the effects of market volatilities on Amkor Technology and BASF SE 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 Amkor Technology with a short position of BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and BASF SE.
Diversification Opportunities for Amkor Technology and BASF SE
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amkor and BASF is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE and Amkor Technology 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 Amkor Technology are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of Amkor Technology i.e., Amkor Technology and BASF SE go up and down completely randomly.
Pair Corralation between Amkor Technology and BASF SE
Assuming the 90 days horizon Amkor Technology is expected to generate 1.13 times more return on investment than BASF SE. However, Amkor Technology is 1.13 times more volatile than BASF SE. It trades about 0.11 of its potential returns per unit of risk. BASF SE is currently generating about -0.04 per unit of risk. If you would invest 2,378 in Amkor Technology on September 5, 2024 and sell it today you would earn a total of 120.00 from holding Amkor Technology or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Amkor Technology vs. BASF SE
Performance |
| Timeline |
| Amkor Technology |
| BASF SE |
Amkor Technology and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amkor Technology and BASF SE
The main advantage of trading using opposite Amkor Technology and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Amkor Technology vs. NVIDIA | Amkor Technology vs. Taiwan Semiconductor Manufacturing | Amkor Technology vs. Advanced Micro Devices |
| BASF SE vs. CVS Health | BASF SE vs. TEXAS ROADHOUSE | BASF SE vs. Sims Metal Management | BASF SE vs. TITANIUM TRANSPORTGROUP |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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