Correlation Between Ion Beam and Applied Materials

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

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

Diversification Opportunities for Ion Beam and Applied Materials

0.34

Correlation Coefficient

Ion Beam  Applied Materials

Weak diversification

The 3 months correlation between Ion and Applied is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ion Beam Applications and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Ion Beam 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 Ion Beam Applications are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Ion Beam i.e., Ion Beam and Applied Materials go up and down completely randomly.

Pair Corralation between Ion Beam and Applied Materials

Assuming the 90 days trading horizon Ion Beam Applications is expected to generate 0.75 times more return on investment than Applied Materials. However, Ion Beam Applications is 1.33 times less risky than Applied Materials. It trades about 0.06 of its potential returns per unit of risk. Applied Materials is currently generating about -0.09 per unit of risk. If you would invest  1,290  in Ion Beam Applications on October 7, 2024 and sell it today you would earn a total of  55.00  from holding Ion Beam Applications or generate 4.26% return on investment over 90 days.

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

Ion Beam Applications  vs.  Applied Materials

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ion Beam is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ion Beam and Applied Materials

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

The idea behind Ion Beam Applications and Applied Materials 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.