Correlation Between Amtech Systems and Extreme Networks

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

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

Diversification Opportunities for Amtech Systems and Extreme Networks

-0.35

Correlation Coefficient

Amtech Systems  Extreme Networks

Very good diversification

The 3 months correlation between Amtech and Extreme is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Amtech Systems and Extreme Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extreme Networks 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 Extreme Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extreme Networks has no effect on the direction of Amtech Systems i.e., Amtech Systems and Extreme Networks go up and down completely randomly.

Pair Corralation between Amtech Systems and Extreme Networks

Given the investment horizon of 90 days Amtech Systems is expected to under-perform the Extreme Networks. But the stock apears to be less risky and, when comparing its historical volatility, Amtech Systems is 2.16 times less risky than Extreme Networks. The stock trades about -0.04 of its potential returns per unit of risk. The Extreme Networks is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,435  in Extreme Networks on August 26, 2024 and sell it today you would earn a total of  168.00  from holding Extreme Networks or generate 11.71% return on investment over 90 days.

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

Amtech Systems  vs.  Extreme Networks

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 weak 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.

Extreme Networks

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Extreme Networks are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Extreme Networks may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Amtech Systems and Extreme Networks

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

The idea behind Amtech Systems and Extreme Networks 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.