Correlation Between Photronics and Amtech Systems

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

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

Diversification Opportunities for Photronics and Amtech Systems

-0.22

Correlation Coefficient

Photronics  Amtech Systems

Very good diversification

The 3 months correlation between Photronics and Amtech is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Photronics and Amtech Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtech Systems and Photronics 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 Photronics are associated (or correlated) with Amtech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtech Systems has no effect on the direction of Photronics i.e., Photronics and Amtech Systems go up and down completely randomly.

Pair Corralation between Photronics and Amtech Systems

Given the investment horizon of 90 days Photronics is expected to generate 0.9 times more return on investment than Amtech Systems. However, Photronics is 1.11 times less risky than Amtech Systems. It trades about 0.04 of its potential returns per unit of risk. Amtech Systems is currently generating about -0.06 per unit of risk. If you would invest  2,382  in Photronics on September 2, 2024 and sell it today you would earn a total of  109.00  from holding Photronics or generate 4.58% return on investment over 90 days.

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

Photronics  vs.  Amtech Systems

Photronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Photronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Photronics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Amtech Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amtech Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Photronics and Amtech Systems

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

The idea behind Photronics and Amtech 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.