Correlation Between SCREEN Holdings and AXT

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

By analyzing existing cross correlation between SCREEN Holdings Co and AXT Inc, you can compare the effects of market volatilities on SCREEN Holdings and AXT 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 SCREEN Holdings with a short position of AXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCREEN Holdings and AXT.

Diversification Opportunities for SCREEN Holdings and AXT

0.49

Correlation Coefficient

SCREEN Holdings  AXT

Very weak diversification

The 3 months correlation between SCREEN and AXT is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding SCREEN Holdings Co and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc and SCREEN Holdings 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 SCREEN Holdings Co are associated (or correlated) with AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of SCREEN Holdings i.e., SCREEN Holdings and AXT go up and down completely randomly.

Pair Corralation between SCREEN Holdings and AXT

Assuming the 90 days horizon SCREEN Holdings Co is expected to under-perform the AXT. But the otc stock apears to be less risky and, when comparing its historical volatility, SCREEN Holdings Co is 1.38 times less risky than AXT. The otc stock trades about -0.27 of its potential returns per unit of risk. The AXT Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  200.00  in AXT Inc on September 22, 2024 and sell it today you would earn a total of  18.00  from holding AXT Inc or generate 9.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	21.88%
Values	Daily Returns

SCREEN Holdings Co  vs.  AXT Inc

SCREEN Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCREEN Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AXT Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AXT Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, AXT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCREEN Holdings and AXT

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

The idea behind SCREEN Holdings Co and AXT Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.