Correlation Between Tokyo Electron and AIXTRON SE
Can any of the company-specific risk be diversified away by investing in both Tokyo Electron and AIXTRON SE 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 Tokyo Electron and AIXTRON SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyo Electron Ltd and AIXTRON SE, you can compare the effects of market volatilities on Tokyo Electron and AIXTRON SE 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 Tokyo Electron with a short position of AIXTRON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyo Electron and AIXTRON SE.
Diversification Opportunities for Tokyo Electron and AIXTRON SE
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tokyo and AIXTRON is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electron Ltd and AIXTRON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIXTRON SE and Tokyo Electron 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 Tokyo Electron Ltd are associated (or correlated) with AIXTRON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIXTRON SE has no effect on the direction of Tokyo Electron i.e., Tokyo Electron and AIXTRON SE go up and down completely randomly.
Pair Corralation between Tokyo Electron and AIXTRON SE
Assuming the 90 days horizon Tokyo Electron Ltd is expected to generate 0.64 times more return on investment than AIXTRON SE. However, Tokyo Electron Ltd is 1.55 times less risky than AIXTRON SE. It trades about -0.14 of its potential returns per unit of risk. AIXTRON SE is currently generating about -0.11 per unit of risk. If you would invest 7,750 in Tokyo Electron Ltd on August 28, 2024 and sell it today you would lose (541.00) from holding Tokyo Electron Ltd or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tokyo Electron Ltd vs. AIXTRON SE
Performance |
| Timeline |
| Tokyo Electron |
| AIXTRON SE |
Tokyo Electron and AIXTRON SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokyo Electron and AIXTRON SE
The main advantage of trading using opposite Tokyo Electron and AIXTRON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyo Electron position performs unexpectedly, AIXTRON SE 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 AIXTRON SE will offset losses from the drop in AIXTRON SE's long position.| Tokyo Electron vs. ASML Holding NV | Tokyo Electron vs. Applied Materials | Tokyo Electron vs. Lam Research Corp | Tokyo Electron vs. KLA Tencor |
| AIXTRON SE vs. Sumco Corp ADR | AIXTRON SE vs. Disco Corp ADR | AIXTRON SE vs. Tokyo Electron | AIXTRON SE vs. Asm Pacific Technology |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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