Correlation Between HE Equipment and Amkor Technology

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

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

Diversification Opportunities for HE Equipment and Amkor Technology

-0.71

Correlation Coefficient

HE Equipment  Amkor Technology

Pay attention - limited upside

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

Pair Corralation between HE Equipment and Amkor Technology

Given the investment horizon of 90 days HE Equipment Services is expected to generate 0.91 times more return on investment than Amkor Technology. However, HE Equipment Services is 1.1 times less risky than Amkor Technology. It trades about 0.04 of its potential returns per unit of risk. Amkor Technology is currently generating about 0.02 per unit of risk. If you would invest  4,471  in HE Equipment Services on September 14, 2024 and sell it today you would earn a total of  1,095  from holding HE Equipment Services or generate 24.49% return on investment over 90 days.

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

HE Equipment Services  vs.  Amkor Technology

HE Equipment Services

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HE Equipment Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, HE Equipment unveiled 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 HE Equipment and Amkor Technology

The main advantage of trading using opposite HE Equipment and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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 HE Equipment Services 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.