Correlation Between Photronics and Acm Research

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

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

Diversification Opportunities for Photronics and Acm Research

-0.75

Correlation Coefficient

Photronics  Acm Research

Pay attention - limited upside

The 3 months correlation between Photronics and Acm is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Photronics and Acm Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acm Research and Photronics 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 Photronics are associated (or correlated) with Acm Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acm Research has no effect on the direction of Photronics i.e., Photronics and Acm Research go up and down completely randomly.

Pair Corralation between Photronics and Acm Research

Given the investment horizon of 90 days Photronics is expected to under-perform the Acm Research. But the stock apears to be less risky and, when comparing its historical volatility, Photronics is 2.39 times less risky than Acm Research. The stock trades about -0.12 of its potential returns per unit of risk. The Acm Research is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,719  in Acm Research on November 29, 2024 and sell it today you would earn a total of  1,050  from holding Acm Research or generate 61.08% return on investment over 90 days.

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

Photronics  vs.  Acm Research

Photronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Photronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Acm Research

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acm Research are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Acm Research reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Photronics and Acm Research

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

The idea behind Photronics and Acm Research 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.