Correlation Between Camtek and AXT

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

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

Diversification Opportunities for Camtek and AXT

0.25

Correlation Coefficient

Camtek  AXT

Modest diversification

The 3 months correlation between Camtek and AXT is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Camtek and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc and Camtek 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 Camtek are associated (or correlated) with AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Camtek i.e., Camtek and AXT go up and down completely randomly.

Pair Corralation between Camtek and AXT

Given the investment horizon of 90 days Camtek is expected to generate 0.57 times more return on investment than AXT. However, Camtek is 1.75 times less risky than AXT. It trades about 0.1 of its potential returns per unit of risk. AXT Inc is currently generating about -0.01 per unit of risk. If you would invest  2,525  in Camtek on October 20, 2024 and sell it today you would earn a total of  7,837  from holding Camtek or generate 310.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Camtek  vs.  AXT Inc

Camtek

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Camtek are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Camtek unveiled solid returns over the last few months and may actually be approaching a breakup point.

AXT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AXT is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Camtek and AXT

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

The idea behind Camtek and AXT Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.