Correlation Between Lam Research and Acm Research
Can any of the company-specific risk be diversified away by investing in both Lam Research and Acm Research 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 Lam Research and Acm Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Research Corp and Acm Research, you can compare the effects of market volatilities on Lam Research and Acm Research 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 Lam Research with a short position of Acm Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Research and Acm Research.
Diversification Opportunities for Lam Research and Acm Research
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lam and Acm is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lam Research Corp and Acm Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acm Research and Lam Research 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 Lam Research Corp are associated (or correlated) with Acm Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acm Research has no effect on the direction of Lam Research i.e., Lam Research and Acm Research go up and down completely randomly.
Pair Corralation between Lam Research and Acm Research
Given the investment horizon of 90 days Lam Research is expected to generate 4.22 times less return on investment than Acm Research. But when comparing it to its historical volatility, Lam Research Corp is 1.67 times less risky than Acm Research. It trades about 0.03 of its potential returns per unit of risk. Acm Research is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,501 in Acm Research on November 3, 2024 and sell it today you would earn a total of 554.00 from holding Acm Research or generate 36.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lam Research Corp vs. Acm Research
Performance |
| Timeline |
| Lam Research Corp |
| Acm Research |
Lam Research and Acm Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Research and Acm Research
The main advantage of trading using opposite Lam Research and Acm Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Research position performs unexpectedly, Acm Research 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 Acm Research will offset losses from the drop in Acm Research's long position.| Lam Research vs. ASML Holding NV | Lam Research vs. KLA Tencor | Lam Research vs. Axcelis Technologies | Lam Research vs. Teradyne |
| Acm Research vs. Axcelis Technologies | Acm Research vs. inTest | Acm Research vs. Lam Research Corp | Acm Research vs. Photronics |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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