Correlation Between Trio Tech and Ichor Holdings

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

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

Diversification Opportunities for Trio Tech and Ichor Holdings

0.26

Correlation Coefficient

Trio Tech  Ichor Holdings

Modest diversification

The 3 months correlation between Trio and Ichor is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Holdings and Trio Tech 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 Trio Tech International are associated (or correlated) with Ichor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Holdings has no effect on the direction of Trio Tech i.e., Trio Tech and Ichor Holdings go up and down completely randomly.

Pair Corralation between Trio Tech and Ichor Holdings

Considering the 90-day investment horizon Trio Tech International is expected to generate 0.89 times more return on investment than Ichor Holdings. However, Trio Tech International is 1.13 times less risky than Ichor Holdings. It trades about 0.08 of its potential returns per unit of risk. Ichor Holdings is currently generating about 0.06 per unit of risk. If you would invest  539.00  in Trio Tech International on September 22, 2024 and sell it today you would earn a total of  80.00  from holding Trio Tech International or generate 14.84% return on investment over 90 days.

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

Trio Tech International  vs.  Ichor Holdings

Trio Tech International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trio Tech International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Trio Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ichor Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ichor Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical indicators, Ichor Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trio Tech and Ichor Holdings

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

The idea behind Trio Tech International and Ichor Holdings 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 Valuation module to check real value of public entities based on technical and fundamental data.