Correlation Between Amtech Systems and BK Technologies

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

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

Diversification Opportunities for Amtech Systems and BK Technologies

-0.63

Correlation Coefficient

Amtech Systems  BK Technologies

Excellent diversification

The 3 months correlation between Amtech and BKTI is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Amtech Systems and BK Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK Technologies and Amtech Systems 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 Amtech Systems are associated (or correlated) with BK Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BK Technologies has no effect on the direction of Amtech Systems i.e., Amtech Systems and BK Technologies go up and down completely randomly.

Pair Corralation between Amtech Systems and BK Technologies

Given the investment horizon of 90 days Amtech Systems is expected to under-perform the BK Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Amtech Systems is 2.21 times less risky than BK Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The BK Technologies is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,750  in BK Technologies on August 31, 2024 and sell it today you would earn a total of  597.00  from holding BK Technologies or generate 21.71% return on investment over 90 days.

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

Amtech Systems  vs.  BK Technologies

Amtech Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amtech Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BK Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BK Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, BK Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amtech Systems and BK Technologies

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

The idea behind Amtech Systems and BK Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.