Correlation Between Align Technology and Amkor Technology

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

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

Diversification Opportunities for Align Technology and Amkor Technology

0.24

Correlation Coefficient

Align Technology  Amkor Technology

Modest diversification

The 3 months correlation between Align and Amkor is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Align Technology 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 Align Technology 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 Align Technology i.e., Align Technology and Amkor Technology go up and down completely randomly.

Pair Corralation between Align Technology and Amkor Technology

Assuming the 90 days horizon Align Technology is expected to generate 0.85 times more return on investment than Amkor Technology. However, Align Technology is 1.18 times less risky than Amkor Technology. It trades about 0.06 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.06 per unit of risk. If you would invest  20,470  in Align Technology on September 3, 2024 and sell it today you would earn a total of  1,470  from holding Align Technology or generate 7.18% return on investment over 90 days.

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

Align Technology  vs.  Amkor Technology

Align Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Align Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amkor Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Align Technology and Amkor Technology

The main advantage of trading using opposite Align Technology and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology 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 Align Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.