Correlation Between American Eagle and Amkor Technology

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

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

Diversification Opportunities for American Eagle and Amkor Technology

0.82

Correlation Coefficient

American Eagle  Amkor Technology

Very poor diversification

The 3 months correlation between American and Amkor is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and American Eagle 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 American Eagle Outfitters 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 American Eagle i.e., American Eagle and Amkor Technology go up and down completely randomly.

Pair Corralation between American Eagle and Amkor Technology

Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 0.89 times more return on investment than Amkor Technology. However, American Eagle Outfitters is 1.12 times less risky than Amkor Technology. It trades about 0.02 of its potential returns per unit of risk. Amkor Technology is currently generating about 0.01 per unit of risk. If you would invest  1,123  in American Eagle Outfitters on December 4, 2024 and sell it today you would earn a total of  97.00  from holding American Eagle Outfitters or generate 8.64% return on investment over 90 days.

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

American Eagle Outfitters  vs.  Amkor Technology

American Eagle Outfitters

Risk-Adjusted Performance

Very Weak

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

Amkor Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with American Eagle and Amkor Technology

The main advantage of trading using opposite American Eagle and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle 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 American Eagle Outfitters 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.