Correlation Between Amkor Technology and Palomar Holdings
Can any of the company-specific risk be diversified away by investing in both Amkor Technology and Palomar Holdings 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 Palomar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amkor Technology and Palomar Holdings, you can compare the effects of market volatilities on Amkor Technology and Palomar Holdings 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 Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and Palomar Holdings.
Diversification Opportunities for Amkor Technology and Palomar Holdings
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amkor and Palomar is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings 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 Palomar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palomar Holdings has no effect on the direction of Amkor Technology i.e., Amkor Technology and Palomar Holdings go up and down completely randomly.
Pair Corralation between Amkor Technology and Palomar Holdings
Given the investment horizon of 90 days Amkor Technology is expected to under-perform the Palomar Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Amkor Technology is 1.03 times less risky than Palomar Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The Palomar Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,482 in Palomar Holdings on September 27, 2024 and sell it today you would earn a total of 1,019 from holding Palomar Holdings or generate 10.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Amkor Technology vs. Palomar Holdings
Performance |
Timeline |
Amkor Technology |
Palomar Holdings |
Amkor Technology and Palomar Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amkor Technology and Palomar Holdings
The main advantage of trading using opposite Amkor Technology and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amkor Technology position performs unexpectedly, Palomar Holdings 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 Palomar Holdings will offset losses from the drop in Palomar Holdings' long position.The idea behind Amkor Technology and Palomar Holdings 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.Palomar Holdings vs. Horace Mann Educators | ||
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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