Correlation Between Amkor Technology and Nestlé SA
Can any of the company-specific risk be diversified away by investing in both Amkor Technology and Nestlé SA 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 Nestlé SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amkor Technology and Nestl SA, you can compare the effects of market volatilities on Amkor Technology and Nestlé SA 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 Nestlé SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and Nestlé SA.
Diversification Opportunities for Amkor Technology and Nestlé SA
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amkor and Nestlé is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Nestl SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestlé SA 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 Nestlé SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestlé SA has no effect on the direction of Amkor Technology i.e., Amkor Technology and Nestlé SA go up and down completely randomly.
Pair Corralation between Amkor Technology and Nestlé SA
Assuming the 90 days horizon Amkor Technology is expected to generate 2.52 times more return on investment than Nestlé SA. However, Amkor Technology is 2.52 times more volatile than Nestl SA. It trades about -0.01 of its potential returns per unit of risk. Nestl SA is currently generating about -0.06 per unit of risk. If you would invest 3,027 in Amkor Technology on October 20, 2024 and sell it today you would lose (549.00) from holding Amkor Technology or give up 18.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amkor Technology vs. Nestl SA
Performance |
| Timeline |
| Amkor Technology |
| Nestlé SA |
Amkor Technology and Nestlé SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amkor Technology and Nestlé SA
The main advantage of trading using opposite Amkor Technology and Nestlé SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, Nestlé SA 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 Nestlé SA will offset losses from the drop in Nestlé SA's long position.| Amkor Technology vs. EVS Broadcast Equipment | Amkor Technology vs. Air Transport Services | Amkor Technology vs. COLUMBIA SPORTSWEAR | Amkor Technology vs. Columbia Sportswear |
| Nestlé SA vs. BioNTech SE | Nestlé SA vs. Digilife Technologies Limited | Nestlé SA vs. Charter Communications | Nestlé SA vs. Amkor Technology |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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