Correlation Between Consolidated Communications and Amkor Technology

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

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

Diversification Opportunities for Consolidated Communications and Amkor Technology

-0.66

Correlation Coefficient

Consolidated Communications  Amkor Technology

Excellent diversification

The 3 months correlation between Consolidated and Amkor is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications Ho and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Consolidated Communications 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 Consolidated Communications Holdings are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of Consolidated Communications i.e., Consolidated Communications and Amkor Technology go up and down completely randomly.

Pair Corralation between Consolidated Communications and Amkor Technology

Assuming the 90 days horizon Consolidated Communications Holdings is expected to generate 0.88 times more return on investment than Amkor Technology. However, Consolidated Communications Holdings is 1.13 times less risky than Amkor Technology. It trades about 0.03 of its potential returns per unit of risk. Amkor Technology is currently generating about 0.03 per unit of risk. If you would invest  354.00  in Consolidated Communications Holdings on September 20, 2024 and sell it today you would earn a total of  92.00  from holding Consolidated Communications Holdings or generate 25.99% return on investment over 90 days.

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

Consolidated Communications Ho  vs.  Amkor Technology

Consolidated Communications

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Communications Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Consolidated Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Consolidated Communications and Amkor Technology

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

The idea behind Consolidated Communications Holdings and Amkor Technology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.