Correlation Between Globalfoundries and Amkor Technology

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

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

Diversification Opportunities for Globalfoundries and Amkor Technology

0.71

Correlation Coefficient

Globalfoundries  Amkor Technology

Poor diversification

The 3 months correlation between Globalfoundries and Amkor is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and Amkor Technology go up and down completely randomly.

Pair Corralation between Globalfoundries and Amkor Technology

Considering the 90-day investment horizon Globalfoundries is expected to generate 1.05 times more return on investment than Amkor Technology. However, Globalfoundries is 1.05 times more volatile than Amkor Technology. It trades about -0.08 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.19 per unit of risk. If you would invest  4,320  in Globalfoundries on December 30, 2024 and sell it today you would lose (631.00) from holding Globalfoundries or give up 14.61% of portfolio value over 90 days.

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

Globalfoundries  vs.  Amkor Technology

Globalfoundries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globalfoundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 Globalfoundries and Amkor Technology

The main advantage of trading using opposite Globalfoundries and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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 Globalfoundries 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.