Correlation Between Amkor Technology and SMA Solar

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

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

Diversification Opportunities for Amkor Technology and SMA Solar

0.2

Correlation Coefficient

Amkor Technology  SMA Solar

Modest diversification

The 3 months correlation between Amkor and SMA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and Amkor Technology 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 Amkor Technology are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Amkor Technology i.e., Amkor Technology and SMA Solar go up and down completely randomly.

Pair Corralation between Amkor Technology and SMA Solar

Assuming the 90 days horizon Amkor Technology is expected to under-perform the SMA Solar. In addition to that, Amkor Technology is 1.23 times more volatile than SMA Solar Technology. It trades about -0.04 of its total potential returns per unit of risk. SMA Solar Technology is currently generating about -0.03 per unit of volatility. If you would invest  5,030  in SMA Solar Technology on February 1, 2024 and sell it today you would lose (106.00) from holding SMA Solar Technology or give up 2.11% of portfolio value over 90 days.

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

Amkor Technology  vs.  SMA Solar Technology

Amkor Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

SMA Solar Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SMA Solar Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SMA Solar may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Amkor Technology and SMA Solar

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

The idea behind Amkor Technology and SMA Solar Technology 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.