Correlation Between Diodes Incorporated and Axcelis Technologies

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

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

Diversification Opportunities for Diodes Incorporated and Axcelis Technologies

0.27

Correlation Coefficient

Diodes Incorporated  Axcelis Technologies

Modest diversification

The 3 months correlation between Diodes and Axcelis is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Diodes Incorporated and Axcelis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axcelis Technologies and Diodes Incorporated 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 Diodes Incorporated are associated (or correlated) with Axcelis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axcelis Technologies has no effect on the direction of Diodes Incorporated i.e., Diodes Incorporated and Axcelis Technologies go up and down completely randomly.

Pair Corralation between Diodes Incorporated and Axcelis Technologies

Given the investment horizon of 90 days Diodes Incorporated is expected to generate 0.89 times more return on investment than Axcelis Technologies. However, Diodes Incorporated is 1.12 times less risky than Axcelis Technologies. It trades about -0.03 of its potential returns per unit of risk. Axcelis Technologies is currently generating about -0.07 per unit of risk. If you would invest  8,052  in Diodes Incorporated on September 24, 2024 and sell it today you would lose (1,896) from holding Diodes Incorporated or give up 23.55% of portfolio value over 90 days.

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

Diodes Incorporated  vs.  Axcelis Technologies

Diodes Incorporated

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Diodes Incorporated are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Diodes Incorporated is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Axcelis Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axcelis Technologies 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 essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Diodes Incorporated and Axcelis Technologies

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

The idea behind Diodes Incorporated and Axcelis Technologies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.