Correlation Between Amkor Technology and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Amkor Technology and Iridium Communications 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 Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amkor Technology and Iridium Communications, you can compare the effects of market volatilities on Amkor Technology and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and Iridium Communications.
Diversification Opportunities for Amkor Technology and Iridium Communications
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Amkor and Iridium is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Amkor Technology i.e., Amkor Technology and Iridium Communications go up and down completely randomly.
Pair Corralation between Amkor Technology and Iridium Communications
Given the investment horizon of 90 days Amkor Technology is expected to under-perform the Iridium Communications. But the stock apears to be less risky and, when comparing its historical volatility, Amkor Technology is 1.19 times less risky than Iridium Communications. The stock trades about -0.06 of its potential returns per unit of risk. The Iridium Communications is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,709 in Iridium Communications on September 2, 2024 and sell it today you would earn a total of 263.00 from holding Iridium Communications or generate 9.71% 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. Iridium Communications
Performance |
| Timeline |
| Amkor Technology |
| Iridium Communications |
Amkor Technology and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amkor Technology and Iridium Communications
The main advantage of trading using opposite Amkor Technology and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Amkor Technology vs. NXP Semiconductors NV | Amkor Technology vs. GSI Technology | Amkor Technology vs. MaxLinear | Amkor Technology vs. Texas Instruments Incorporated |
| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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