Correlation Between Deswell Industries and Amphenol
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and Amphenol 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 Deswell Industries and Amphenol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and Amphenol, you can compare the effects of market volatilities on Deswell Industries and Amphenol 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 Deswell Industries with a short position of Amphenol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and Amphenol.
Diversification Opportunities for Deswell Industries and Amphenol
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deswell and Amphenol is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol and Deswell Industries 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 Deswell Industries are associated (or correlated) with Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of Deswell Industries i.e., Deswell Industries and Amphenol go up and down completely randomly.
Pair Corralation between Deswell Industries and Amphenol
Given the investment horizon of 90 days Deswell Industries is expected to generate 1.32 times more return on investment than Amphenol. However, Deswell Industries is 1.32 times more volatile than Amphenol. It trades about 0.15 of its potential returns per unit of risk. Amphenol is currently generating about 0.17 per unit of risk. If you would invest 228.00 in Deswell Industries on September 2, 2024 and sell it today you would earn a total of 44.00 from holding Deswell Industries or generate 19.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deswell Industries vs. Amphenol
Performance |
| Timeline |
| Deswell Industries |
| Amphenol |
Deswell Industries and Amphenol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and Amphenol
The main advantage of trading using opposite Deswell Industries and Amphenol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, Amphenol 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 Amphenol will offset losses from the drop in Amphenol's long position.| Deswell Industries vs. Knowles Cor | Deswell Industries vs. Ubiquiti Networks | Deswell Industries vs. AmpliTech Group | Deswell Industries vs. Viavi Solutions |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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