Correlation Between MKS Instruments and Autoscope Technologies

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

By analyzing existing cross correlation between MKS Instruments and Autoscope Technologies Corp, you can compare the effects of market volatilities on MKS Instruments and Autoscope Technologies 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 MKS Instruments with a short position of Autoscope Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKS Instruments and Autoscope Technologies.

Diversification Opportunities for MKS Instruments and Autoscope Technologies

-0.16

Correlation Coefficient

MKS Instruments  Autoscope Technologies

Good diversification

The 3 months correlation between MKS and Autoscope is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MKS Instruments and Autoscope Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoscope Technologies and MKS Instruments 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 MKS Instruments are associated (or correlated) with Autoscope Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoscope Technologies has no effect on the direction of MKS Instruments i.e., MKS Instruments and Autoscope Technologies go up and down completely randomly.

Pair Corralation between MKS Instruments and Autoscope Technologies

Given the investment horizon of 90 days MKS Instruments is expected to generate 4.45 times less return on investment than Autoscope Technologies. In addition to that, MKS Instruments is 1.8 times more volatile than Autoscope Technologies Corp. It trades about 0.04 of its total potential returns per unit of risk. Autoscope Technologies Corp is currently generating about 0.3 per unit of volatility. If you would invest  380.00  in Autoscope Technologies Corp on September 13, 2024 and sell it today you would earn a total of  58.00  from holding Autoscope Technologies Corp or generate 15.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	6.46%
Values	Daily Returns

MKS Instruments  vs.  Autoscope Technologies Corp

MKS Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MKS Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MKS Instruments is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Autoscope Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autoscope Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Autoscope Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MKS Instruments and Autoscope Technologies

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

The idea behind MKS Instruments and Autoscope Technologies Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.