Correlation Between SMA Solar and Amkor Technology
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Amkor Technology 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 SMA Solar and Amkor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Amkor Technology, you can compare the effects of market volatilities on SMA Solar and Amkor Technology 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 SMA Solar with a short position of Amkor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Amkor Technology.
Diversification Opportunities for SMA Solar and Amkor Technology
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SMA and Amkor is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and SMA Solar 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 SMA Solar Technology are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of SMA Solar i.e., SMA Solar and Amkor Technology go up and down completely randomly.
Pair Corralation between SMA Solar and Amkor Technology
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Amkor Technology. In addition to that, SMA Solar is 2.28 times more volatile than Amkor Technology. It trades about -0.09 of its total potential returns per unit of risk. Amkor Technology is currently generating about 0.04 per unit of volatility. If you would invest 2,410 in Amkor Technology on September 2, 2024 and sell it today you would earn a total of 40.00 from holding Amkor Technology or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Amkor Technology
Performance |
| Timeline |
| SMA Solar Technology |
| Amkor Technology |
SMA Solar and Amkor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Amkor Technology
The main advantage of trading using opposite SMA Solar and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Amkor Technology 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 Amkor Technology will offset losses from the drop in Amkor Technology's long position.| SMA Solar vs. Ming Le Sports | SMA Solar vs. Columbia Sportswear | SMA Solar vs. CVW CLEANTECH INC | SMA Solar vs. CHINA TONTINE WINES |
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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