Correlation Between Trio Tech and AXT

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

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

Diversification Opportunities for Trio Tech and AXT

-0.12

Correlation Coefficient

Trio Tech  AXT

Good diversification

The 3 months correlation between Trio and AXT is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc and Trio Tech 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 Trio Tech International are associated (or correlated) with AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Trio Tech i.e., Trio Tech and AXT go up and down completely randomly.

Pair Corralation between Trio Tech and AXT

Considering the 90-day investment horizon Trio Tech International is expected to under-perform the AXT. But the stock apears to be less risky and, when comparing its historical volatility, Trio Tech International is 1.6 times less risky than AXT. The stock trades about -0.32 of its potential returns per unit of risk. The AXT Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  216.00  in AXT Inc on October 5, 2024 and sell it today you would earn a total of  3.00  from holding AXT Inc or generate 1.39% return on investment over 90 days.

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

Trio Tech International  vs.  AXT Inc

Trio Tech International

Risk-Adjusted Performance

0 of 100

Very Weak

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

AXT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Trio Tech and AXT

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

The idea behind Trio Tech International and AXT Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.