Correlation Between APPLIED MATERIALS and SIEM OFFSHORE

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

By analyzing existing cross correlation between APPLIED MATERIALS and SIEM OFFSHORE NEW, you can compare the effects of market volatilities on APPLIED MATERIALS and SIEM OFFSHORE 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 APPLIED MATERIALS with a short position of SIEM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and SIEM OFFSHORE.

Diversification Opportunities for APPLIED MATERIALS and SIEM OFFSHORE

-0.09

Correlation Coefficient

APPLIED MATERIALS  SIEM OFFSHORE

Good diversification

The 3 months correlation between APPLIED and SIEM is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and SIEM OFFSHORE NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEM OFFSHORE NEW and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with SIEM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEM OFFSHORE NEW has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and SIEM OFFSHORE go up and down completely randomly.

Pair Corralation between APPLIED MATERIALS and SIEM OFFSHORE

Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 0.49 times more return on investment than SIEM OFFSHORE. However, APPLIED MATERIALS is 2.05 times less risky than SIEM OFFSHORE. It trades about 0.09 of its potential returns per unit of risk. SIEM OFFSHORE NEW is currently generating about -0.01 per unit of risk. If you would invest  16,764  in APPLIED MATERIALS on October 23, 2024 and sell it today you would earn a total of  1,862  from holding APPLIED MATERIALS or generate 11.11% return on investment over 90 days.

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

APPLIED MATERIALS  vs.  SIEM OFFSHORE NEW

APPLIED MATERIALS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in APPLIED MATERIALS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, APPLIED MATERIALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

SIEM OFFSHORE NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIEM OFFSHORE NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, SIEM OFFSHORE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with APPLIED MATERIALS and SIEM OFFSHORE

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

The idea behind APPLIED MATERIALS and SIEM OFFSHORE NEW 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.