Correlation Between Amkor Technology and Nuvalent

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

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

Diversification Opportunities for Amkor Technology and Nuvalent

0.84

Correlation Coefficient

Amkor Technology  Nuvalent

Very poor diversification

The 3 months correlation between Amkor and Nuvalent is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent 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 Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Amkor Technology i.e., Amkor Technology and Nuvalent go up and down completely randomly.

Pair Corralation between Amkor Technology and Nuvalent

Given the investment horizon of 90 days Amkor Technology is expected to generate 4.5 times less return on investment than Nuvalent. But when comparing it to its historical volatility, Amkor Technology is 1.3 times less risky than Nuvalent. It trades about 0.02 of its potential returns per unit of risk. Nuvalent is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,978  in Nuvalent on September 20, 2024 and sell it today you would earn a total of  5,480  from holding Nuvalent or generate 184.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Amkor Technology  vs.  Nuvalent

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

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Amkor Technology and Nuvalent

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

The idea behind Amkor Technology and Nuvalent 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 Global Correlations module to find global opportunities by holding instruments from different markets.