Correlation Between Amkor Technology and Rolls-Royce Holdings
Can any of the company-specific risk be diversified away by investing in both Amkor Technology and Rolls-Royce Holdings 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 Rolls-Royce Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amkor Technology and Rolls Royce Holdings plc, you can compare the effects of market volatilities on Amkor Technology and Rolls-Royce Holdings 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 Rolls-Royce Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and Rolls-Royce Holdings.
Diversification Opportunities for Amkor Technology and Rolls-Royce Holdings
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amkor and Rolls-Royce is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Rolls Royce Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolls Royce Holdings 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 Rolls-Royce Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolls Royce Holdings has no effect on the direction of Amkor Technology i.e., Amkor Technology and Rolls-Royce Holdings go up and down completely randomly.
Pair Corralation between Amkor Technology and Rolls-Royce Holdings
Assuming the 90 days horizon Amkor Technology is expected to generate 0.93 times more return on investment than Rolls-Royce Holdings. However, Amkor Technology is 1.08 times less risky than Rolls-Royce Holdings. It trades about 0.04 of its potential returns per unit of risk. Rolls Royce Holdings plc is currently generating about 0.04 per unit of risk. If you would invest 2,410 in Amkor Technology on September 2, 2024 and sell it today you would earn a total of 40.00 from holding Amkor Technology or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amkor Technology vs. Rolls Royce Holdings plc
Performance |
| Timeline |
| Amkor Technology |
| Rolls Royce Holdings |
Amkor Technology and Rolls-Royce Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amkor Technology and Rolls-Royce Holdings
The main advantage of trading using opposite Amkor Technology and Rolls-Royce Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, Rolls-Royce Holdings 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 Rolls-Royce Holdings will offset losses from the drop in Rolls-Royce Holdings' long position.The idea behind Amkor Technology and Rolls Royce Holdings plc 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.| Rolls-Royce Holdings vs. Amkor Technology | Rolls-Royce Holdings vs. GLG LIFE TECH | Rolls-Royce Holdings vs. CECO ENVIRONMENTAL | Rolls-Royce Holdings vs. Digilife Technologies Limited |
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 CEOs Directory module to screen CEOs from public companies around the world.
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