Correlation Between Amkor Technology and NLIGHT

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

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

Diversification Opportunities for Amkor Technology and NLIGHT

0.81

Correlation Coefficient

Amkor Technology  NLIGHT

Very poor diversification

The 3 months correlation between Amkor and NLIGHT is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and nLIGHT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nLIGHT 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 NLIGHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nLIGHT Inc has no effect on the direction of Amkor Technology i.e., Amkor Technology and NLIGHT go up and down completely randomly.

Pair Corralation between Amkor Technology and NLIGHT

Given the investment horizon of 90 days Amkor Technology is expected to under-perform the NLIGHT. But the stock apears to be less risky and, when comparing its historical volatility, Amkor Technology is 1.36 times less risky than NLIGHT. The stock trades about -0.17 of its potential returns per unit of risk. The nLIGHT Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,026  in nLIGHT Inc on December 25, 2024 and sell it today you would lose (145.00) from holding nLIGHT Inc or give up 14.13% of portfolio value over 90 days.

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

Amkor Technology  vs.  nLIGHT 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 April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

nLIGHT Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days nLIGHT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Amkor Technology and NLIGHT

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

The idea behind Amkor Technology and nLIGHT 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.