Correlation Between Teradyne and Micro-Mechanics (Holdings)
Can any of the company-specific risk be diversified away by investing in both Teradyne and Micro-Mechanics (Holdings) 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 Teradyne and Micro-Mechanics (Holdings) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Micro Mechanics, you can compare the effects of market volatilities on Teradyne and Micro-Mechanics (Holdings) 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 Teradyne with a short position of Micro-Mechanics (Holdings). Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Micro-Mechanics (Holdings).
Diversification Opportunities for Teradyne and Micro-Mechanics (Holdings)
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Teradyne and Micro-Mechanics is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Micro Mechanics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro-Mechanics (Holdings) and Teradyne 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 Teradyne are associated (or correlated) with Micro-Mechanics (Holdings). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro-Mechanics (Holdings) has no effect on the direction of Teradyne i.e., Teradyne and Micro-Mechanics (Holdings) go up and down completely randomly.
Pair Corralation between Teradyne and Micro-Mechanics (Holdings)
Considering the 90-day investment horizon Teradyne is expected to generate 1.1 times more return on investment than Micro-Mechanics (Holdings). However, Teradyne is 1.1 times more volatile than Micro Mechanics. It trades about 0.04 of its potential returns per unit of risk. Micro Mechanics is currently generating about -0.02 per unit of risk. If you would invest 9,195 in Teradyne on August 26, 2024 and sell it today you would earn a total of 1,626 from holding Teradyne or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.18% |
| Values | Daily Returns |
Teradyne vs. Micro Mechanics
Performance |
| Timeline |
| Teradyne |
| Micro-Mechanics (Holdings) |
Teradyne and Micro-Mechanics (Holdings) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Micro-Mechanics (Holdings)
The main advantage of trading using opposite Teradyne and Micro-Mechanics (Holdings) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Micro-Mechanics (Holdings) 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 Micro-Mechanics (Holdings) will offset losses from the drop in Micro-Mechanics (Holdings)'s long position.The idea behind Teradyne and Micro Mechanics 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.| Micro-Mechanics (Holdings) vs. Applied Materials | Micro-Mechanics (Holdings) vs. KLA Tencor | Micro-Mechanics (Holdings) vs. ASML Holding NV | Micro-Mechanics (Holdings) vs. Axcelis 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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