Correlation Between Amkor Technology and Dow

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

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

Diversification Opportunities for Amkor Technology and Dow

0.5

Correlation Coefficient

Amkor Technology  Dow

Very weak diversification

The 3 months correlation between Amkor and Dow is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc 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 Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of Amkor Technology i.e., Amkor Technology and Dow go up and down completely randomly.

Pair Corralation between Amkor Technology and Dow

Given the investment horizon of 90 days Amkor Technology is expected to under-perform the Dow. In addition to that, Amkor Technology is 1.47 times more volatile than Dow Inc. It trades about -0.1 of its total potential returns per unit of risk. Dow Inc is currently generating about -0.12 per unit of volatility. If you would invest  4,421  in Dow Inc on November 29, 2024 and sell it today you would lose (536.00) from holding Dow Inc or give up 12.12% of portfolio value over 90 days.

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

Amkor Technology  vs.  Dow Inc

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. Even with inconsistent performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Dow Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dow Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Amkor Technology and Dow

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

The idea behind Amkor Technology and Dow Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.