Correlation Between Entegris and Aehr Test

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

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

Diversification Opportunities for Entegris and Aehr Test

0.1

Correlation Coefficient

Entegris  Aehr Test

Average diversification

The 3 months correlation between Entegris and Aehr is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and Aehr Test Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aehr Test Systems and Entegris 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 Entegris are associated (or correlated) with Aehr Test. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aehr Test Systems has no effect on the direction of Entegris i.e., Entegris and Aehr Test go up and down completely randomly.

Pair Corralation between Entegris and Aehr Test

Given the investment horizon of 90 days Entegris is expected to generate 0.49 times more return on investment than Aehr Test. However, Entegris is 2.03 times less risky than Aehr Test. It trades about 0.0 of its potential returns per unit of risk. Aehr Test Systems is currently generating about -0.02 per unit of risk. If you would invest  10,821  in Entegris on September 2, 2024 and sell it today you would lose (258.00) from holding Entegris or give up 2.38% of portfolio value over 90 days.

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

Entegris  vs.  Aehr Test Systems

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Entegris is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Aehr Test Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aehr Test Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Aehr Test is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Entegris and Aehr Test

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

The idea behind Entegris and Aehr Test Systems 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.