Correlation Between Diodes Incorporated and Entegris

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

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

Diversification Opportunities for Diodes Incorporated and Entegris

0.37

Correlation Coefficient

Diodes Incorporated  Entegris

Weak diversification

The 3 months correlation between Diodes and Entegris is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Diodes Incorporated and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris 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 Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of Diodes Incorporated i.e., Diodes Incorporated and Entegris go up and down completely randomly.

Pair Corralation between Diodes Incorporated and Entegris

Given the investment horizon of 90 days Diodes Incorporated is expected to generate 1.08 times more return on investment than Entegris. However, Diodes Incorporated is 1.08 times more volatile than Entegris. It trades about -0.02 of its potential returns per unit of risk. Entegris is currently generating about -0.07 per unit of risk. If you would invest  7,061  in Diodes Incorporated on September 23, 2024 and sell it today you would lose (905.00) from holding Diodes Incorporated or give up 12.82% 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.  Entegris

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Diodes Incorporated and Entegris

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

The idea behind Diodes Incorporated and Entegris 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.