Correlation Between Amtech Systems and Allegro Microsystems
Can any of the company-specific risk be diversified away by investing in both Amtech Systems and Allegro Microsystems 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 Amtech Systems and Allegro Microsystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amtech Systems and Allegro Microsystems, you can compare the effects of market volatilities on Amtech Systems and Allegro Microsystems 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 Amtech Systems with a short position of Allegro Microsystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amtech Systems and Allegro Microsystems.
Diversification Opportunities for Amtech Systems and Allegro Microsystems
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amtech and Allegro is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Amtech Systems and Allegro Microsystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegro Microsystems and Amtech Systems 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 Amtech Systems are associated (or correlated) with Allegro Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegro Microsystems has no effect on the direction of Amtech Systems i.e., Amtech Systems and Allegro Microsystems go up and down completely randomly.
Pair Corralation between Amtech Systems and Allegro Microsystems
Given the investment horizon of 90 days Amtech Systems is expected to generate 0.75 times more return on investment than Allegro Microsystems. However, Amtech Systems is 1.33 times less risky than Allegro Microsystems. It trades about -0.02 of its potential returns per unit of risk. Allegro Microsystems is currently generating about -0.03 per unit of risk. If you would invest 613.00 in Amtech Systems on August 27, 2024 and sell it today you would lose (23.00) from holding Amtech Systems or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amtech Systems vs. Allegro Microsystems
Performance |
| Timeline |
| Amtech Systems |
| Allegro Microsystems |
Amtech Systems and Allegro Microsystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amtech Systems and Allegro Microsystems
The main advantage of trading using opposite Amtech Systems and Allegro Microsystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amtech Systems position performs unexpectedly, Allegro Microsystems 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 Allegro Microsystems will offset losses from the drop in Allegro Microsystems' long position.| Amtech Systems vs. Ultra Clean Holdings | Amtech Systems vs. Veeco Instruments | Amtech Systems vs. Cohu Inc | Amtech Systems vs. Onto Innovation |
| Allegro Microsystems vs. Synaptics Incorporated | Allegro Microsystems vs. Microchip Technology | Allegro Microsystems vs. Qorvo Inc | Allegro Microsystems vs. Monolithic Power Systems |
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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