Correlation Between Amkor Technology and MACOM Technology

Can any of the company-specific risk be diversified away by investing in both Amkor Technology and MACOM 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 Amkor Technology and MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amkor Technology and MACOM Technology Solutions, you can compare the effects of market volatilities on Amkor Technology and MACOM 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 Amkor Technology with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and MACOM Technology.

Diversification Opportunities for Amkor Technology and MACOM Technology

-0.62

Correlation Coefficient

Amkor Technology  MACOM Technology

Excellent diversification

The 3 months correlation between Amkor and MACOM is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and Amkor Technology 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 Amkor Technology are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of Amkor Technology i.e., Amkor Technology and MACOM Technology go up and down completely randomly.

Pair Corralation between Amkor Technology and MACOM Technology

Given the investment horizon of 90 days Amkor Technology is expected to generate 2.67 times less return on investment than MACOM Technology. In addition to that, Amkor Technology is 1.22 times more volatile than MACOM Technology Solutions. It trades about 0.03 of its total potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.11 per unit of volatility. If you would invest  5,381  in MACOM Technology Solutions on August 31, 2024 and sell it today you would earn a total of  7,786  from holding MACOM Technology Solutions or generate 144.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Amkor Technology  vs.  MACOM Technology Solutions

Amkor Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

MACOM Technology Sol

Risk-Adjusted Performance

14 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, MACOM Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amkor Technology and MACOM Technology

The main advantage of trading using opposite Amkor Technology and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, MACOM 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.

The idea behind Amkor Technology and MACOM Technology Solutions 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.