Correlation Between Teradyne and Photronics
Can any of the company-specific risk be diversified away by investing in both Teradyne and Photronics 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 Photronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Photronics, you can compare the effects of market volatilities on Teradyne and Photronics 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 Photronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Photronics.
Diversification Opportunities for Teradyne and Photronics
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Teradyne and Photronics is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics 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 Photronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photronics has no effect on the direction of Teradyne i.e., Teradyne and Photronics go up and down completely randomly.
Pair Corralation between Teradyne and Photronics
Considering the 90-day investment horizon Teradyne is expected to under-perform the Photronics. In addition to that, Teradyne is 1.06 times more volatile than Photronics. It trades about -0.01 of its total potential returns per unit of risk. Photronics is currently generating about -0.01 per unit of volatility. If you would invest 2,393 in Photronics on October 31, 2024 and sell it today you would lose (111.00) from holding Photronics or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Photronics
Performance |
| Timeline |
| Teradyne |
| Photronics |
Teradyne and Photronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Photronics
The main advantage of trading using opposite Teradyne and Photronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Photronics 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 Photronics will offset losses from the drop in Photronics' long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| Photronics vs. Diodes Incorporated | Photronics vs. Daqo New Energy | Photronics vs. Micron Technology | Photronics vs. MagnaChip Semiconductor |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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