Correlation Between Data IO and AXT

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

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

Diversification Opportunities for Data IO and AXT

0.89

Correlation Coefficient

Data IO  AXT

Very poor diversification

The 3 months correlation between Data and AXT is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Data IO and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc and Data IO 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 Data IO are associated (or correlated) with AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Data IO i.e., Data IO and AXT go up and down completely randomly.

Pair Corralation between Data IO and AXT

Given the investment horizon of 90 days Data IO is expected to generate 1.64 times less return on investment than AXT. But when comparing it to its historical volatility, Data IO is 2.24 times less risky than AXT. It trades about 0.17 of its potential returns per unit of risk. AXT Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  153.00  in AXT Inc on May 11, 2025 and sell it today you would earn a total of  61.00  from holding AXT Inc or generate 39.87% return on investment over 90 days.

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

Data IO  vs.  AXT Inc

Data IO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Data IO are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, Data IO displayed solid returns over the last few months and may actually be approaching a breakup point.

AXT Inc

Risk-Adjusted Performance

Fair

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

Pair Trading with Data IO and AXT

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

The idea behind Data IO and AXT Inc 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.