Correlation Between Onto Innovation and Ichor Holdings

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

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

Diversification Opportunities for Onto Innovation and Ichor Holdings

-0.41

Correlation Coefficient

Onto Innovation  Ichor Holdings

Very good diversification

The 3 months correlation between Onto and Ichor is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Onto Innovation and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Holdings and Onto Innovation 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 Onto Innovation are associated (or correlated) with Ichor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Holdings has no effect on the direction of Onto Innovation i.e., Onto Innovation and Ichor Holdings go up and down completely randomly.

Pair Corralation between Onto Innovation and Ichor Holdings

Given the investment horizon of 90 days Onto Innovation is expected to generate 0.99 times more return on investment than Ichor Holdings. However, Onto Innovation is 1.01 times less risky than Ichor Holdings. It trades about -0.02 of its potential returns per unit of risk. Ichor Holdings is currently generating about -0.02 per unit of risk. If you would invest  16,418  in Onto Innovation on November 28, 2024 and sell it today you would lose (1,321) from holding Onto Innovation or give up 8.05% of portfolio value over 90 days.

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

Onto Innovation  vs.  Ichor Holdings

Onto Innovation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Onto Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Onto Innovation is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Ichor Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ichor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Ichor Holdings is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Onto Innovation and Ichor Holdings

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

The idea behind Onto Innovation and Ichor Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.