Correlation Between RBC Bearings and Amkor Technology

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

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

Diversification Opportunities for RBC Bearings and Amkor Technology

-0.57

Correlation Coefficient

RBC Bearings  Amkor Technology

Excellent diversification

The 3 months correlation between RBC and Amkor is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and RBC Bearings 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 RBC Bearings Incorporated 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 RBC Bearings i.e., RBC Bearings and Amkor Technology go up and down completely randomly.

Pair Corralation between RBC Bearings and Amkor Technology

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.72 times more return on investment than Amkor Technology. However, RBC Bearings Incorporated is 1.38 times less risky than Amkor Technology. It trades about 0.1 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.17 per unit of risk. If you would invest  30,019  in RBC Bearings Incorporated on December 27, 2024 and sell it today you would earn a total of  3,217  from holding RBC Bearings Incorporated or generate 10.72% return on investment over 90 days.

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

RBC Bearings Incorporated  vs.  Amkor Technology

RBC Bearings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Amkor Technology

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with RBC Bearings and Amkor Technology

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

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.