Correlation Between Amkor Technology and Western Copper

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Can any of the company-specific risk be diversified away by investing in both Amkor Technology and Western Copper 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 Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amkor Technology and Western Copper and, you can compare the effects of market volatilities on Amkor Technology and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and Western Copper.

Diversification Opportunities for Amkor Technology and Western Copper

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Amkor and Western is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Amkor Technology i.e., Amkor Technology and Western Copper go up and down completely randomly.

Pair Corralation between Amkor Technology and Western Copper

Given the investment horizon of 90 days Amkor Technology is expected to generate 0.85 times more return on investment than Western Copper. However, Amkor Technology is 1.17 times less risky than Western Copper. It trades about -0.11 of its potential returns per unit of risk. Western Copper and is currently generating about -0.1 per unit of risk. If you would invest  3,046  in Amkor Technology on September 23, 2024 and sell it today you would lose (519.00) from holding Amkor Technology or give up 17.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Amkor Technology  vs.  Western Copper and

 Performance 
       Timeline  
Amkor Technology 

Risk-Adjusted Performance

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Strong
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 unsteady performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Western Copper 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Amkor Technology and Western Copper Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amkor Technology and Western Copper

The main advantage of trading using opposite Amkor Technology and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.
The idea behind Amkor Technology and Western Copper and 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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