Correlation Between Teradyne and Ichor Holdings

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

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

Diversification Opportunities for Teradyne and Ichor Holdings

-0.23

Correlation Coefficient

Teradyne  Ichor Holdings

Very good diversification

The 3 months correlation between Teradyne and Ichor is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Holdings and Teradyne 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 Teradyne are associated (or correlated) with Ichor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Holdings has no effect on the direction of Teradyne i.e., Teradyne and Ichor Holdings go up and down completely randomly.

Pair Corralation between Teradyne and Ichor Holdings

Considering the 90-day investment horizon Teradyne is expected to generate 0.66 times more return on investment than Ichor Holdings. However, Teradyne is 1.52 times less risky than Ichor Holdings. It trades about 0.04 of its potential returns per unit of risk. Ichor Holdings is currently generating about -0.02 per unit of risk. If you would invest  10,988  in Teradyne on November 28, 2024 and sell it today you would earn a total of  370.00  from holding Teradyne or generate 3.37% return on investment over 90 days.

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

Teradyne  vs.  Ichor Holdings

Teradyne

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Teradyne is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ichor Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ichor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Ichor Holdings is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Teradyne and Ichor Holdings

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

The idea behind Teradyne and Ichor Holdings 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.