Correlation Between Amtech Systems and BP PLC
Can any of the company-specific risk be diversified away by investing in both Amtech Systems and BP PLC 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 BP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amtech Systems and BP PLC ADR, you can compare the effects of market volatilities on Amtech Systems and BP PLC 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 BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amtech Systems and BP PLC.
Diversification Opportunities for Amtech Systems and BP PLC
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amtech and BP PLC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amtech Systems and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR 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 BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Amtech Systems i.e., Amtech Systems and BP PLC go up and down completely randomly.
Pair Corralation between Amtech Systems and BP PLC
Given the investment horizon of 90 days Amtech Systems is expected to generate 0.97 times more return on investment than BP PLC. However, Amtech Systems is 1.03 times less risky than BP PLC. It trades about 0.08 of its potential returns per unit of risk. BP PLC ADR is currently generating about -0.1 per unit of risk. If you would invest 574.00 in Amtech Systems on August 28, 2024 and sell it today you would earn a total of 16.00 from holding Amtech Systems or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amtech Systems vs. BP PLC ADR
Performance |
| Timeline |
| Amtech Systems |
| BP PLC ADR |
Amtech Systems and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amtech Systems and BP PLC
The main advantage of trading using opposite Amtech Systems and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amtech Systems position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Amtech Systems vs. Ultra Clean Holdings | Amtech Systems vs. Veeco Instruments | Amtech Systems vs. Cohu Inc | Amtech Systems vs. Onto Innovation |
| BP PLC vs. TotalEnergies SE ADR | BP PLC vs. Chevron Corp | BP PLC vs. Exxon Mobil Corp | BP PLC vs. Equinor ASA ADR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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