Correlation Between Amkor Technology and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both Amkor Technology and Herc 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 Herc 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 Herc Holdings, you can compare the effects of market volatilities on Amkor Technology and Herc 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 Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and Herc Holdings.
Diversification Opportunities for Amkor Technology and Herc Holdings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amkor and Herc is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc 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 Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of Amkor Technology i.e., Amkor Technology and Herc Holdings go up and down completely randomly.
Pair Corralation between Amkor Technology and Herc Holdings
Given the investment horizon of 90 days Amkor Technology is expected to generate 0.88 times more return on investment than Herc Holdings. However, Amkor Technology is 1.14 times less risky than Herc Holdings. It trades about -0.21 of its potential returns per unit of risk. Herc Holdings is currently generating about -0.44 per unit of risk. If you would invest 2,452 in Amkor Technology on November 30, 2024 and sell it today you would lose (348.00) from holding Amkor Technology or give up 14.19% 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. Herc Holdings
Performance |
| Timeline |
| Amkor Technology |
| Herc Holdings |
Amkor Technology and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amkor Technology and Herc Holdings
The main advantage of trading using opposite Amkor Technology and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, Herc 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.| Amkor Technology vs. Power Integrations | ||
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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