Correlation Between Amkor Technology and SWK Holdings

Can any of the company-specific risk be diversified away by investing in both Amkor Technology and SWK 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 SWK 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 SWK Holdings, you can compare the effects of market volatilities on Amkor Technology and SWK 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 SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and SWK Holdings.

Diversification Opportunities for Amkor Technology and SWK Holdings

-0.39

Correlation Coefficient

Amkor Technology  SWK Holdings

Very good diversification

The 3 months correlation between Amkor and SWK is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and SWK Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK 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 SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings has no effect on the direction of Amkor Technology i.e., Amkor Technology and SWK Holdings go up and down completely randomly.

Pair Corralation between Amkor Technology and SWK Holdings

Given the investment horizon of 90 days Amkor Technology is expected to generate 1.77 times less return on investment than SWK Holdings. In addition to that, Amkor Technology is 7.06 times more volatile than SWK Holdings. It trades about 0.01 of its total potential returns per unit of risk. SWK Holdings is currently generating about 0.11 per unit of volatility. If you would invest  2,211  in SWK Holdings on October 11, 2024 and sell it today you would earn a total of  324.00  from holding SWK Holdings or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.24%
Values	Daily Returns

Amkor Technology  vs.  SWK Holdings

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

SWK Holdings

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SWK Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, SWK Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Amkor Technology and SWK Holdings

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

The idea behind Amkor Technology and SWK 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.

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