Correlation Between Montauk Renewables and Amkor Technology

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

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

Diversification Opportunities for Montauk Renewables and Amkor Technology

0.49

Correlation Coefficient

Montauk Renewables  Amkor Technology

Very weak diversification

The 3 months correlation between Montauk and Amkor is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Montauk Renewables 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 Montauk Renewables 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 Montauk Renewables i.e., Montauk Renewables and Amkor Technology go up and down completely randomly.

Pair Corralation between Montauk Renewables and Amkor Technology

Given the investment horizon of 90 days Montauk Renewables is expected to generate 1.72 times more return on investment than Amkor Technology. However, Montauk Renewables is 1.72 times more volatile than Amkor Technology. It trades about -0.02 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.06 per unit of risk. If you would invest  451.00  in Montauk Renewables on September 14, 2024 and sell it today you would lose (42.00) from holding Montauk Renewables or give up 9.31% of portfolio value over 90 days.

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

Montauk Renewables  vs.  Amkor Technology

Montauk Renewables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montauk Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Montauk Renewables is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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. Even with latest inconsistent performance, the Stock's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Montauk Renewables and Amkor Technology

The main advantage of trading using opposite Montauk Renewables and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables 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 Montauk Renewables 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.