Correlation Between Amkor Technology and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both Amkor Technology and Cisco Systems 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 Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amkor Technology and Cisco Systems, you can compare the effects of market volatilities on Amkor Technology and Cisco Systems 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 Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and Cisco Systems.
Diversification Opportunities for Amkor Technology and Cisco Systems
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amkor and Cisco is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems 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 Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of Amkor Technology i.e., Amkor Technology and Cisco Systems go up and down completely randomly.
Pair Corralation between Amkor Technology and Cisco Systems
Assuming the 90 days horizon Amkor Technology is expected to generate 3.56 times less return on investment than Cisco Systems. In addition to that, Amkor Technology is 2.42 times more volatile than Cisco Systems. It trades about 0.01 of its total potential returns per unit of risk. Cisco Systems is currently generating about 0.09 per unit of volatility. If you would invest 4,306 in Cisco Systems on September 2, 2024 and sell it today you would earn a total of 1,279 from holding Cisco Systems or generate 29.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amkor Technology vs. Cisco Systems
Performance |
| Timeline |
| Amkor Technology |
| Cisco Systems |
Amkor Technology and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amkor Technology and Cisco Systems
The main advantage of trading using opposite Amkor Technology and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, Cisco Systems 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 Cisco Systems will offset losses from the drop in Cisco Systems' long position.The idea behind Amkor Technology and Cisco Systems 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.| Cisco Systems vs. Amkor Technology | Cisco Systems vs. KAUFMAN ET BROAD | Cisco Systems vs. NetSol Technologies | Cisco Systems vs. Axcelis Technologies |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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