Correlation Between Amphenol and TDK

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

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

Diversification Opportunities for Amphenol and TDK

0.77

Correlation Coefficient

Amphenol  TDK

Poor diversification

The 3 months correlation between Amphenol and TDK is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Amphenol and TDK Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDK Corporation and Amphenol 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 Amphenol are associated (or correlated) with TDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDK Corporation has no effect on the direction of Amphenol i.e., Amphenol and TDK go up and down completely randomly.

Pair Corralation between Amphenol and TDK

Assuming the 90 days horizon Amphenol is expected to generate 1.22 times more return on investment than TDK. However, Amphenol is 1.22 times more volatile than TDK Corporation. It trades about -0.02 of its potential returns per unit of risk. TDK Corporation is currently generating about -0.17 per unit of risk. If you would invest  6,758  in Amphenol on December 26, 2024 and sell it today you would lose (351.00) from holding Amphenol or give up 5.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Amphenol  vs.  TDK Corp.

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 nearly stable basic indicators, Amphenol is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TDK Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days TDK Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Amphenol and TDK

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

The idea behind Amphenol and TDK Corporation 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.