Correlation Between Amkor Technology and Gamma Communications

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

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

Diversification Opportunities for Amkor Technology and Gamma Communications

0.55

Correlation Coefficient

Amkor Technology  Gamma Communications

Very weak diversification

The 3 months correlation between Amkor and Gamma is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc and Amkor 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 Amkor Technology are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of Amkor Technology i.e., Amkor Technology and Gamma Communications go up and down completely randomly.

Pair Corralation between Amkor Technology and Gamma Communications

Assuming the 90 days horizon Amkor Technology is expected to under-perform the Gamma Communications. In addition to that, Amkor Technology is 1.29 times more volatile than Gamma Communications plc. It trades about -0.01 of its total potential returns per unit of risk. Gamma Communications plc is currently generating about 0.09 per unit of volatility. If you would invest  1,238  in Gamma Communications plc on September 20, 2024 and sell it today you would earn a total of  692.00  from holding Gamma Communications plc or generate 55.9% return on investment over 90 days.

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

Amkor Technology  vs.  Gamma Communications plc

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.

Gamma Communications plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamma Communications plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gamma Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amkor Technology and Gamma Communications

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

The idea behind Amkor Technology and Gamma Communications plc 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..