Correlation Between Ichor Holdings and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both Ichor Holdings and Tokyo Electron 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 Tokyo Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ichor Holdings and Tokyo Electron Ltd, you can compare the effects of market volatilities on Ichor Holdings and Tokyo Electron 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 Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ichor Holdings and Tokyo Electron.
Diversification Opportunities for Ichor Holdings and Tokyo Electron
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ichor and Tokyo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Holdings and Tokyo Electron Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron 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 Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of Ichor Holdings i.e., Ichor Holdings and Tokyo Electron go up and down completely randomly.
Pair Corralation between Ichor Holdings and Tokyo Electron
Given the investment horizon of 90 days Ichor Holdings is expected to generate 1.66 times more return on investment than Tokyo Electron. However, Ichor Holdings is 1.66 times more volatile than Tokyo Electron Ltd. It trades about 0.25 of its potential returns per unit of risk. Tokyo Electron Ltd is currently generating about -0.1 per unit of risk. If you would invest 2,785 in Ichor Holdings on August 28, 2024 and sell it today you would earn a total of 652.00 from holding Ichor Holdings or generate 23.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ichor Holdings vs. Tokyo Electron Ltd
Performance |
| Timeline |
| Ichor Holdings |
| Tokyo Electron |
Ichor Holdings and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ichor Holdings and Tokyo Electron
The main advantage of trading using opposite Ichor Holdings and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ichor Holdings position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.The idea behind Ichor Holdings and Tokyo Electron Ltd 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.| Tokyo Electron vs. Advantest | Tokyo Electron vs. Disco Corp ADR | Tokyo Electron vs. Teradyne | Tokyo Electron vs. Lasertec |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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