Correlation Between Photronics and Teradyne
Can any of the company-specific risk be diversified away by investing in both Photronics and Teradyne 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 Photronics and Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Photronics and Teradyne, you can compare the effects of market volatilities on Photronics and Teradyne 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 Photronics with a short position of Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Photronics and Teradyne.
Diversification Opportunities for Photronics and Teradyne
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Photronics and Teradyne is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Photronics and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Photronics 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 Photronics are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Photronics i.e., Photronics and Teradyne go up and down completely randomly.
Pair Corralation between Photronics and Teradyne
Given the investment horizon of 90 days Photronics is expected to generate 1.72 times less return on investment than Teradyne. In addition to that, Photronics is 1.03 times more volatile than Teradyne. It trades about 0.04 of its total potential returns per unit of risk. Teradyne is currently generating about 0.07 per unit of volatility. If you would invest 12,579 in Teradyne on October 20, 2024 and sell it today you would earn a total of 1,261 from holding Teradyne or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Photronics vs. Teradyne
Performance |
| Timeline |
| Photronics |
| Teradyne |
Photronics and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Photronics and Teradyne
The main advantage of trading using opposite Photronics and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Photronics position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| Photronics vs. Aehr Test Systems | Photronics vs. Lam Research Corp | Photronics vs. KLA Tencor | Photronics vs. Kulicke and Soffa |
| Teradyne vs. First Solar | Teradyne vs. Sunrun Inc | Teradyne vs. Canadian Solar | Teradyne vs. SolarEdge Technologies |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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