Correlation Between ON SEMICONDUCTOR and AMP

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

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

Diversification Opportunities for ON SEMICONDUCTOR and AMP

0.18

Correlation Coefficient

ON SEMICONDUCTOR  AMP

Average diversification

The 3 months correlation between XS4 and AMP is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR and AMP Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP Limited and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR are associated (or correlated) with AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP Limited has no effect on the direction of ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and AMP go up and down completely randomly.

Pair Corralation between ON SEMICONDUCTOR and AMP

Assuming the 90 days trading horizon ON SEMICONDUCTOR is expected to under-perform the AMP. In addition to that, ON SEMICONDUCTOR is 1.28 times more volatile than AMP Limited. It trades about -0.06 of its total potential returns per unit of risk. AMP Limited is currently generating about 0.11 per unit of volatility. If you would invest  91.00  in AMP Limited on September 12, 2024 and sell it today you would earn a total of  4.00  from holding AMP Limited or generate 4.4% return on investment over 90 days.

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

ON SEMICONDUCTOR  vs.  AMP Limited

ON SEMICONDUCTOR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ON SEMICONDUCTOR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ON SEMICONDUCTOR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AMP Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AMP Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AMP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ON SEMICONDUCTOR and AMP

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

The idea behind ON SEMICONDUCTOR and AMP Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..