Correlation Between EPAM Systems and Amkor Technology

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

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

Diversification Opportunities for EPAM Systems and Amkor Technology

0.71

Correlation Coefficient

EPAM Systems  Amkor Technology

Poor diversification

The 3 months correlation between EPAM and Amkor is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and EPAM Systems 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 EPAM Systems are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of EPAM Systems i.e., EPAM Systems and Amkor Technology go up and down completely randomly.

Pair Corralation between EPAM Systems and Amkor Technology

Given the investment horizon of 90 days EPAM Systems is expected to under-perform the Amkor Technology. But the stock apears to be less risky and, when comparing its historical volatility, EPAM Systems is 1.01 times less risky than Amkor Technology. The stock trades about -0.18 of its potential returns per unit of risk. The Amkor Technology is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  2,595  in Amkor Technology on December 27, 2024 and sell it today you would lose (659.00) from holding Amkor Technology or give up 25.39% of portfolio value over 90 days.

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

EPAM Systems  vs.  Amkor Technology

EPAM Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days EPAM Systems 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Amkor Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amkor Technology 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 forward-looking signals 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.

Pair Trading with EPAM Systems and Amkor Technology

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

The idea behind EPAM Systems and Amkor Technology 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.