Correlation Between Photronics and AXT
Can any of the company-specific risk be diversified away by investing in both Photronics and AXT 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 AXT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Photronics and AXT Inc, you can compare the effects of market volatilities on Photronics and AXT 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 AXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Photronics and AXT.
Diversification Opportunities for Photronics and AXT
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Photronics and AXT is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Photronics and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc 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 AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Photronics i.e., Photronics and AXT go up and down completely randomly.
Pair Corralation between Photronics and AXT
Given the investment horizon of 90 days Photronics is expected to generate 21.3 times less return on investment than AXT. But when comparing it to its historical volatility, Photronics is 1.03 times less risky than AXT. It trades about 0.01 of its potential returns per unit of risk. AXT Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 205.00 in AXT Inc on October 6, 2024 and sell it today you would earn a total of 22.00 from holding AXT Inc or generate 10.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Photronics vs. AXT Inc
Performance |
Timeline |
Photronics |
AXT Inc |
Photronics and AXT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Photronics and AXT
The main advantage of trading using opposite Photronics and AXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Photronics position performs unexpectedly, AXT 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 AXT will offset losses from the drop in AXT's long position.Photronics vs. Aehr Test Systems | Photronics vs. Lam Research Corp | Photronics vs. KLA Tencor | Photronics vs. Kulicke and Soffa |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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