Correlation Between MTI WIRELESS and Amkor Technology

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

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

Diversification Opportunities for MTI WIRELESS and Amkor Technology

0.45

Correlation Coefficient

MTI WIRELESS  Amkor Technology

Very weak diversification

The 3 months correlation between MTI and Amkor is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and MTI WIRELESS 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 MTI WIRELESS EDGE are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of MTI WIRELESS i.e., MTI WIRELESS and Amkor Technology go up and down completely randomly.

Pair Corralation between MTI WIRELESS and Amkor Technology

Assuming the 90 days horizon MTI WIRELESS EDGE is expected to under-perform the Amkor Technology. But the stock apears to be less risky and, when comparing its historical volatility, MTI WIRELESS EDGE is 1.12 times less risky than Amkor Technology. The stock trades about -0.13 of its potential returns per unit of risk. The Amkor Technology is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,770  in Amkor Technology on September 13, 2024 and sell it today you would lose (249.00) from holding Amkor Technology or give up 8.99% of portfolio value over 90 days.

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

MTI WIRELESS EDGE  vs.  Amkor Technology

MTI WIRELESS EDGE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTI WIRELESS EDGE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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. Despite nearly stable basic indicators, Amkor Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MTI WIRELESS and Amkor Technology

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

The idea behind MTI WIRELESS EDGE and Amkor Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.