Correlation Between Aehr Test and Ichor Holdings

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

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

Diversification Opportunities for Aehr Test and Ichor Holdings

-0.45

Correlation Coefficient

Aehr Test  Ichor Holdings

Very good diversification

The 3 months correlation between Aehr and Ichor is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aehr Test Systems and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Holdings and Aehr Test 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 Aehr Test Systems 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 Aehr Test i.e., Aehr Test and Ichor Holdings go up and down completely randomly.

Pair Corralation between Aehr Test and Ichor Holdings

Given the investment horizon of 90 days Aehr Test Systems is expected to under-perform the Ichor Holdings. In addition to that, Aehr Test is 1.3 times more volatile than Ichor Holdings. It trades about -0.02 of its total potential returns per unit of risk. Ichor Holdings is currently generating about 0.07 per unit of volatility. If you would invest  2,872  in Ichor Holdings on September 2, 2024 and sell it today you would earn a total of  404.00  from holding Ichor Holdings or generate 14.07% return on investment over 90 days.

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

Aehr Test Systems  vs.  Ichor Holdings

Aehr Test Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aehr Test Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Aehr Test is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Ichor Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ichor Holdings are ranked lower than 5 (%) 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 Aehr Test and Ichor Holdings

The main advantage of trading using opposite Aehr Test and Ichor Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aehr Test 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 Aehr Test Systems 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.