Correlation Between ASM International and Teradyne
Can any of the company-specific risk be diversified away by investing in both ASM International and Teradyne 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 ASM International and Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASM International NV and Teradyne, you can compare the effects of market volatilities on ASM International and Teradyne 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 ASM International with a short position of Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASM International and Teradyne.
Diversification Opportunities for ASM International and Teradyne
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ASM and Teradyne is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ASM International NV and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and ASM International 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 ASM International NV are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of ASM International i.e., ASM International and Teradyne go up and down completely randomly.
Pair Corralation between ASM International and Teradyne
Assuming the 90 days horizon ASM International NV is expected to under-perform the Teradyne. But the pink sheet apears to be less risky and, when comparing its historical volatility, ASM International NV is 1.01 times less risky than Teradyne. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Teradyne is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 11,133 in Teradyne on August 28, 2024 and sell it today you would lose (66.00) from holding Teradyne or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
ASM International NV vs. Teradyne
Performance |
| Timeline |
| ASM International |
| Teradyne |
ASM International and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASM International and Teradyne
The main advantage of trading using opposite ASM International and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASM International position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| ASM International vs. Lasertec | ASM International vs. Tokyo Electron | ASM International vs. Tokyo Electron Ltd | ASM International vs. BE Semiconductor Industries |
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 Stocks Directory module to find actively traded stocks across global markets.
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