Correlation Between Sensient Technologies and Amkor Technology

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

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

Diversification Opportunities for Sensient Technologies and Amkor Technology

-0.06

Correlation Coefficient

Sensient Technologies  Amkor Technology

Good diversification

The 3 months correlation between Sensient and Amkor is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies i.e., Sensient Technologies and Amkor Technology go up and down completely randomly.

Pair Corralation between Sensient Technologies and Amkor Technology

Considering the 90-day investment horizon Sensient Technologies is expected to generate 0.5 times more return on investment than Amkor Technology. However, Sensient Technologies is 2.02 times less risky than Amkor Technology. It trades about 0.05 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.02 per unit of risk. If you would invest  6,504  in Sensient Technologies on September 20, 2024 and sell it today you would earn a total of  1,142  from holding Sensient Technologies or generate 17.56% return on investment over 90 days.

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

Sensient Technologies  vs.  Amkor Technology

Sensient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensient Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sensient Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 Sensient Technologies and Amkor Technology

The main advantage of trading using opposite Sensient Technologies and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies 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 Sensient Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..