Correlation Between Amkor Technology and CF Industries
Can any of the company-specific risk be diversified away by investing in both Amkor Technology and CF Industries 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 CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amkor Technology and CF Industries Holdings, you can compare the effects of market volatilities on Amkor Technology and CF Industries 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 CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and CF Industries.
Diversification Opportunities for Amkor Technology and CF Industries
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amkor and CF Industries is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries 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 CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of Amkor Technology i.e., Amkor Technology and CF Industries go up and down completely randomly.
Pair Corralation between Amkor Technology and CF Industries
Given the investment horizon of 90 days Amkor Technology is expected to generate 1.13 times more return on investment than CF Industries. However, Amkor Technology is 1.13 times more volatile than CF Industries Holdings. It trades about -0.13 of its potential returns per unit of risk. CF Industries Holdings is currently generating about -0.2 per unit of risk. If you would invest 2,372 in Amkor Technology on November 28, 2024 and sell it today you would lose (200.00) from holding Amkor Technology or give up 8.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amkor Technology vs. CF Industries Holdings
Performance |
| Timeline |
| Amkor Technology |
| CF Industries Holdings |
Amkor Technology and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amkor Technology and CF Industries
The main advantage of trading using opposite Amkor Technology and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.| Amkor Technology vs. Power Integrations | Amkor Technology vs. Diodes Incorporated | Amkor Technology vs. MACOM Technology Solutions | Amkor Technology vs. Cirrus Logic |
| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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