Correlation Between SL Green and Amkor Technology

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

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

Diversification Opportunities for SL Green and Amkor Technology

-0.49

Correlation Coefficient

SL Green  Amkor Technology

Very good diversification

The 3 months correlation between SLG and Amkor is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and SL Green 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 SL Green Realty 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 SL Green i.e., SL Green and Amkor Technology go up and down completely randomly.

Pair Corralation between SL Green and Amkor Technology

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the Amkor Technology. But the stock apears to be less risky and, when comparing its historical volatility, SL Green Realty is 1.12 times less risky than Amkor Technology. The stock trades about -0.12 of its potential returns per unit of risk. The Amkor Technology is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,900  in Amkor Technology on September 26, 2024 and sell it today you would lose (253.00) from holding Amkor Technology or give up 8.72% of portfolio value over 90 days.

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

SL Green Realty  vs.  Amkor Technology

SL Green Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, SL Green is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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

Pair Trading with SL Green and Amkor Technology

The main advantage of trading using opposite SL Green and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green 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 SL Green Realty 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.