Correlation Between Amtech Systems and Olin
Can any of the company-specific risk be diversified away by investing in both Amtech Systems and Olin 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 Olin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amtech Systems and Olin Corporation, you can compare the effects of market volatilities on Amtech Systems and Olin 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 Olin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amtech Systems and Olin.
Diversification Opportunities for Amtech Systems and Olin
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Amtech and Olin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Amtech Systems and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin 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 Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of Amtech Systems i.e., Amtech Systems and Olin go up and down completely randomly.
Pair Corralation between Amtech Systems and Olin
Given the investment horizon of 90 days Amtech Systems is expected to generate 1.71 times less return on investment than Olin. But when comparing it to its historical volatility, Amtech Systems is 1.06 times less risky than Olin. It trades about 0.08 of its potential returns per unit of risk. Olin Corporation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,152 in Olin Corporation on August 28, 2024 and sell it today you would earn a total of 207.00 from holding Olin Corporation or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amtech Systems vs. Olin Corp.
Performance |
| Timeline |
| Amtech Systems |
| Olin |
Amtech Systems and Olin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amtech Systems and Olin
The main advantage of trading using opposite Amtech Systems and Olin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amtech Systems position performs unexpectedly, Olin 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 Olin will offset losses from the drop in Olin's long position.The idea behind Amtech Systems and Olin Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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