Correlation Between Coherent and MKS Instruments

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

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

Diversification Opportunities for Coherent and MKS Instruments

0.94

Correlation Coefficient

Coherent  MKS Instruments

Almost no diversification

The 3 months correlation between Coherent and MKS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Coherent and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments and Coherent 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 Coherent are associated (or correlated) with MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of Coherent i.e., Coherent and MKS Instruments go up and down completely randomly.

Pair Corralation between Coherent and MKS Instruments

Given the investment horizon of 90 days Coherent is expected to under-perform the MKS Instruments. In addition to that, Coherent is 1.67 times more volatile than MKS Instruments. It trades about -0.09 of its total potential returns per unit of risk. MKS Instruments is currently generating about -0.11 per unit of volatility. If you would invest  10,385  in MKS Instruments on December 28, 2024 and sell it today you would lose (2,226) from holding MKS Instruments or give up 21.43% of portfolio value over 90 days.

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

Coherent  vs.  MKS Instruments

Coherent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coherent has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

MKS Instruments

Risk-Adjusted Performance

Very Weak

Over the last 90 days MKS Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Coherent and MKS Instruments

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

The idea behind Coherent and MKS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.