Correlation Between Tokyo Electron and Amtech Systems

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

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

Diversification Opportunities for Tokyo Electron and Amtech Systems

0.15

Correlation Coefficient

Tokyo Electron  Amtech Systems

Average diversification

The 3 months correlation between Tokyo and Amtech is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electron and Amtech Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtech Systems and Tokyo Electron 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 Tokyo Electron are associated (or correlated) with Amtech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtech Systems has no effect on the direction of Tokyo Electron i.e., Tokyo Electron and Amtech Systems go up and down completely randomly.

Pair Corralation between Tokyo Electron and Amtech Systems

Assuming the 90 days horizon Tokyo Electron is expected to generate 2.3 times more return on investment than Amtech Systems. However, Tokyo Electron is 2.3 times more volatile than Amtech Systems. It trades about 0.15 of its potential returns per unit of risk. Amtech Systems is currently generating about -0.13 per unit of risk. If you would invest  15,294  in Tokyo Electron on October 15, 2024 and sell it today you would earn a total of  1,529  from holding Tokyo Electron or generate 10.0% return on investment over 90 days.

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

Tokyo Electron  vs.  Amtech Systems

Tokyo Electron

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amtech Systems

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tokyo Electron and Amtech Systems

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

The idea behind Tokyo Electron and Amtech Systems 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.