Correlation Between Entegris and AXT

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

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

Diversification Opportunities for Entegris and AXT

0.32

Correlation Coefficient

Entegris  AXT

Weak diversification

The 3 months correlation between Entegris and AXT is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc and Entegris 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 Entegris 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 Entegris i.e., Entegris and AXT go up and down completely randomly.

Pair Corralation between Entegris and AXT

Given the investment horizon of 90 days Entegris is expected to under-perform the AXT. But the stock apears to be less risky and, when comparing its historical volatility, Entegris is 1.37 times less risky than AXT. The stock trades about -0.11 of its potential returns per unit of risk. The AXT Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  205.00  in AXT Inc on October 6, 2024 and sell it today you would earn a total of  22.00  from holding AXT Inc or generate 10.73% return on investment over 90 days.

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

Entegris  vs.  AXT Inc

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.

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 Entegris and AXT

The main advantage of trading using opposite Entegris and AXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entegris 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 Entegris 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.