Correlation Between Garmin and Amkor Technology

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

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

Diversification Opportunities for Garmin and Amkor Technology

-0.87

Correlation Coefficient

Garmin  Amkor Technology

Pay attention - limited upside

The 3 months correlation between Garmin and Amkor is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Garmin and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Garmin 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 Garmin 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 Garmin i.e., Garmin and Amkor Technology go up and down completely randomly.

Pair Corralation between Garmin and Amkor Technology

Given the investment horizon of 90 days Garmin is expected to under-perform the Amkor Technology. But the stock apears to be less risky and, when comparing its historical volatility, Garmin is 1.84 times less risky than Amkor Technology. The stock trades about -0.24 of its potential returns per unit of risk. The Amkor Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,628  in Amkor Technology on October 7, 2024 and sell it today you would earn a total of  25.00  from holding Amkor Technology or generate 0.95% return on investment over 90 days.

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

Garmin  vs.  Amkor Technology

Garmin

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Garmin displayed solid returns over the last few months and may actually be approaching a breakup point.

Amkor Technology

Risk-Adjusted Performance

0 of 100

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 latest inconsistent performance, the Stock's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Garmin and Amkor Technology

The main advantage of trading using opposite Garmin and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garmin 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 Garmin 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.