Correlation Between Asm Pacific and Veeco Instruments

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

By analyzing existing cross correlation between Asm Pacific Technology and Veeco Instruments, you can compare the effects of market volatilities on Asm Pacific and Veeco Instruments 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 Asm Pacific with a short position of Veeco Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asm Pacific and Veeco Instruments.

Diversification Opportunities for Asm Pacific and Veeco Instruments

0.91

Correlation Coefficient

Asm Pacific  Veeco Instruments

Almost no diversification

The 3 months correlation between Asm and Veeco is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Asm Pacific Technology and Veeco Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instruments and Asm Pacific 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 Asm Pacific Technology are associated (or correlated) with Veeco Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeco Instruments has no effect on the direction of Asm Pacific i.e., Asm Pacific and Veeco Instruments go up and down completely randomly.

Pair Corralation between Asm Pacific and Veeco Instruments

Assuming the 90 days horizon Asm Pacific Technology is expected to under-perform the Veeco Instruments. But the pink sheet apears to be less risky and, when comparing its historical volatility, Asm Pacific Technology is 1.19 times less risky than Veeco Instruments. The pink sheet trades about -0.25 of its potential returns per unit of risk. The Veeco Instruments is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,768  in Veeco Instruments on October 6, 2024 and sell it today you would lose (52.00) from holding Veeco Instruments or give up 1.88% of portfolio value over 90 days.

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

Asm Pacific Technology  vs.  Veeco Instruments

Asm Pacific Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asm Pacific Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Veeco Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veeco Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Asm Pacific and Veeco Instruments

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

The idea behind Asm Pacific Technology and Veeco Instruments 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.