Correlation Between Camtek and Teradyne

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

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

Diversification Opportunities for Camtek and Teradyne

0.59

Correlation Coefficient

Camtek  Teradyne

Very weak diversification

The 3 months correlation between Camtek and Teradyne is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Camtek and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Camtek i.e., Camtek and Teradyne go up and down completely randomly.

Pair Corralation between Camtek and Teradyne

Given the investment horizon of 90 days Camtek is expected to generate 1.57 times more return on investment than Teradyne. However, Camtek is 1.57 times more volatile than Teradyne. It trades about 0.03 of its potential returns per unit of risk. Teradyne is currently generating about 0.04 per unit of risk. If you would invest  7,450  in Camtek on November 28, 2024 and sell it today you would earn a total of  238.00  from holding Camtek or generate 3.19% return on investment over 90 days.

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

Camtek  vs.  Teradyne

Camtek

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Camtek are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Camtek may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Teradyne

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Teradyne is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Camtek and Teradyne

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

The idea behind Camtek and Teradyne 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.