Correlation Between Aehr Test and Teradyne
Can any of the company-specific risk be diversified away by investing in both Aehr Test 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 Aehr Test and Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aehr Test Systems and Teradyne, you can compare the effects of market volatilities on Aehr Test 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 Aehr Test with a short position of Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aehr Test and Teradyne.
Diversification Opportunities for Aehr Test and Teradyne
Weak diversification
The 3 months correlation between Aehr and Teradyne is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aehr Test Systems and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Aehr Test 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 Aehr Test Systems 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 Aehr Test i.e., Aehr Test and Teradyne go up and down completely randomly.
Pair Corralation between Aehr Test and Teradyne
Given the investment horizon of 90 days Aehr Test Systems is expected to generate 1.94 times more return on investment than Teradyne. However, Aehr Test is 1.94 times more volatile than Teradyne. It trades about -0.02 of its potential returns per unit of risk. Teradyne is currently generating about -0.07 per unit of risk. If you would invest 1,351 in Aehr Test Systems on August 31, 2024 and sell it today you would lose (178.00) from holding Aehr Test Systems or give up 13.18% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aehr Test Systems vs. Teradyne
Performance |
Timeline |
Aehr Test Systems |
Teradyne |
Aehr Test and Teradyne Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aehr Test and Teradyne
The main advantage of trading using opposite Aehr Test and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aehr Test 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.Aehr Test vs. Photronics | Aehr Test vs. Lam Research Corp | Aehr Test vs. KLA Tencor | Aehr Test vs. Kulicke and Soffa |
Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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