Correlation Between AXT and Onto Innovation
Can any of the company-specific risk be diversified away by investing in both AXT and Onto Innovation 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 AXT and Onto Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXT Inc and Onto Innovation, you can compare the effects of market volatilities on AXT and Onto Innovation 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 AXT with a short position of Onto Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXT and Onto Innovation.
Diversification Opportunities for AXT and Onto Innovation
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AXT and Onto is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AXT Inc and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation and AXT 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 AXT Inc are associated (or correlated) with Onto Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onto Innovation has no effect on the direction of AXT i.e., AXT and Onto Innovation go up and down completely randomly.
Pair Corralation between AXT and Onto Innovation
Given the investment horizon of 90 days AXT Inc is expected to under-perform the Onto Innovation. In addition to that, AXT is 1.59 times more volatile than Onto Innovation. It trades about -0.21 of its total potential returns per unit of risk. Onto Innovation is currently generating about -0.25 per unit of volatility. If you would invest 20,224 in Onto Innovation on August 28, 2024 and sell it today you would lose (3,705) from holding Onto Innovation or give up 18.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXT Inc vs. Onto Innovation
Performance |
| Timeline |
| AXT Inc |
| Onto Innovation |
AXT and Onto Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXT and Onto Innovation
The main advantage of trading using opposite AXT and Onto Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXT position performs unexpectedly, Onto Innovation 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 Onto Innovation will offset losses from the drop in Onto Innovation's long position.The idea behind AXT Inc and Onto Innovation 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.| Onto Innovation vs. Camtek | Onto Innovation vs. Amtech Systems | Onto Innovation vs. Veeco Instruments | Onto Innovation vs. Ichor Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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