Correlation Between Amkor Technology and Align Technology

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

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

Diversification Opportunities for Amkor Technology and Align Technology

0.26

Correlation Coefficient

Amkor Technology  Align Technology

Modest diversification

The 3 months correlation between Amkor and Align is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Amkor Technology i.e., Amkor Technology and Align Technology go up and down completely randomly.

Pair Corralation between Amkor Technology and Align Technology

Assuming the 90 days horizon Amkor Technology is expected to generate 14.01 times less return on investment than Align Technology. In addition to that, Amkor Technology is 1.46 times more volatile than Align Technology. It trades about 0.02 of its total potential returns per unit of risk. Align Technology is currently generating about 0.43 per unit of volatility. If you would invest  18,785  in Align Technology on September 1, 2024 and sell it today you would earn a total of  2,925  from holding Align Technology or generate 15.57% return on investment over 90 days.

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

Amkor Technology  vs.  Align Technology

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Align Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Align Technology 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 Align Technology

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

The idea behind Amkor Technology and Align 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.