Correlation Between Amkor Technology and Northern Trust

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

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

Diversification Opportunities for Amkor Technology and Northern Trust

-0.62

Correlation Coefficient

Amkor Technology  Northern Trust

Excellent diversification

The 3 months correlation between Amkor and Northern is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust 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 Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of Amkor Technology i.e., Amkor Technology and Northern Trust go up and down completely randomly.

Pair Corralation between Amkor Technology and Northern Trust

Assuming the 90 days horizon Amkor Technology is expected to generate 1.23 times more return on investment than Northern Trust. However, Amkor Technology is 1.23 times more volatile than Northern Trust. It trades about -0.1 of its potential returns per unit of risk. Northern Trust is currently generating about -0.14 per unit of risk. If you would invest  2,580  in Amkor Technology on October 4, 2024 and sell it today you would lose (97.00) from holding Amkor Technology or give up 3.76% of portfolio value over 90 days.

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

Amkor Technology  vs.  Northern Trust

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 uncertain 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.

Northern Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northern Trust reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amkor Technology and Northern Trust

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

The idea behind Amkor Technology and Northern Trust 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.