Correlation Between Axcelis Technologies and NVE

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

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

Diversification Opportunities for Axcelis Technologies and NVE

-0.32

Correlation Coefficient

Axcelis Technologies  NVE

Very good diversification

The 3 months correlation between Axcelis and NVE is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Axcelis Technologies and NVE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVE Corporation and Axcelis Technologies 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 Axcelis Technologies are associated (or correlated) with NVE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVE Corporation has no effect on the direction of Axcelis Technologies i.e., Axcelis Technologies and NVE go up and down completely randomly.

Pair Corralation between Axcelis Technologies and NVE

Given the investment horizon of 90 days Axcelis Technologies is expected to generate 1.7 times more return on investment than NVE. However, Axcelis Technologies is 1.7 times more volatile than NVE Corporation. It trades about -0.16 of its potential returns per unit of risk. NVE Corporation is currently generating about -0.3 per unit of risk. If you would invest  11,239  in Axcelis Technologies on January 30, 2024 and sell it today you would lose (933.00) from holding Axcelis Technologies or give up 8.3% of portfolio value over 90 days.

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

Axcelis Technologies  vs.  NVE Corp.

Axcelis Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axcelis Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NVE Corporation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVE Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, NVE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Axcelis Technologies and NVE

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

The idea behind Axcelis Technologies and NVE 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.

Check out your portfolio center.

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.