Correlation Between Ichor Holdings and Applied Opt
Can any of the company-specific risk be diversified away by investing in both Ichor Holdings and Applied Opt 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 Ichor Holdings and Applied Opt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ichor Holdings and Applied Opt, you can compare the effects of market volatilities on Ichor Holdings and Applied Opt 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 Ichor Holdings with a short position of Applied Opt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ichor Holdings and Applied Opt.
Diversification Opportunities for Ichor Holdings and Applied Opt
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ichor and Applied is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Holdings and Applied Opt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Opt and Ichor Holdings 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 Ichor Holdings are associated (or correlated) with Applied Opt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Opt has no effect on the direction of Ichor Holdings i.e., Ichor Holdings and Applied Opt go up and down completely randomly.
Pair Corralation between Ichor Holdings and Applied Opt
Given the investment horizon of 90 days Ichor Holdings is expected to generate 0.59 times more return on investment than Applied Opt. However, Ichor Holdings is 1.68 times less risky than Applied Opt. It trades about 0.01 of its potential returns per unit of risk. Applied Opt is currently generating about -0.01 per unit of risk. If you would invest 3,268 in Ichor Holdings on November 9, 2024 and sell it today you would lose (18.00) from holding Ichor Holdings or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ichor Holdings vs. Applied Opt
Performance |
| Timeline |
| Ichor Holdings |
| Applied Opt |
Ichor Holdings and Applied Opt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ichor Holdings and Applied Opt
The main advantage of trading using opposite Ichor Holdings and Applied Opt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ichor Holdings position performs unexpectedly, Applied Opt 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 Applied Opt will offset losses from the drop in Applied Opt's long position.| Ichor Holdings vs. Cohu Inc | Ichor Holdings vs. Entegris | Ichor Holdings vs. Kulicke and Soffa | Ichor Holdings vs. Photronics |
| Applied Opt vs. Lumentum Holdings | Applied Opt vs. Ichor Holdings | Applied Opt vs. Fabrinet | Applied Opt vs. Hello Group |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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