Correlation Between InTest and Photronics

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

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

Diversification Opportunities for InTest and Photronics

0.85

Correlation Coefficient

InTest  Photronics

Very poor diversification

The 3 months correlation between InTest and Photronics is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding inTest and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics and InTest 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 inTest are associated (or correlated) with Photronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photronics has no effect on the direction of InTest i.e., InTest and Photronics go up and down completely randomly.

Pair Corralation between InTest and Photronics

Given the investment horizon of 90 days inTest is expected to under-perform the Photronics. But the stock apears to be less risky and, when comparing its historical volatility, inTest is 1.09 times less risky than Photronics. The stock trades about -0.17 of its potential returns per unit of risk. The Photronics is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  2,331  in Photronics on January 24, 2025 and sell it today you would lose (463.00) from holding Photronics or give up 19.86% of portfolio value over 90 days.

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

inTest  vs.  Photronics

inTest

Risk-Adjusted Performance

Very Weak

Over the last 90 days inTest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Photronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Photronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with InTest and Photronics

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

The idea behind inTest and Photronics 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.