Correlation Between TE Connectivity and Amphenol

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

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

Diversification Opportunities for TE Connectivity and Amphenol

0.07

Correlation Coefficient

TE Connectivity  Amphenol

Significant diversification

The 3 months correlation between TEL and Amphenol is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding TE Connectivity and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol and TE Connectivity 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 TE Connectivity are associated (or correlated) with Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of TE Connectivity i.e., TE Connectivity and Amphenol go up and down completely randomly.

Pair Corralation between TE Connectivity and Amphenol

Considering the 90-day investment horizon TE Connectivity is expected to generate 0.57 times more return on investment than Amphenol. However, TE Connectivity is 1.76 times less risky than Amphenol. It trades about 0.05 of its potential returns per unit of risk. Amphenol is currently generating about -0.01 per unit of risk. If you would invest  14,438  in TE Connectivity on December 27, 2024 and sell it today you would earn a total of  536.00  from holding TE Connectivity or generate 3.71% return on investment over 90 days.

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

TE Connectivity  vs.  Amphenol

TE Connectivity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TE Connectivity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, TE Connectivity is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Amphenol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amphenol has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Amphenol is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with TE Connectivity and Amphenol

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

The idea behind TE Connectivity and Amphenol 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.