Correlation Between Photronics and Applied Materials

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

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

Diversification Opportunities for Photronics and Applied Materials

0.41

Correlation Coefficient

Photronics  Applied Materials

Very weak diversification

The 3 months correlation between Photronics and Applied is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Photronics and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Photronics 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 Photronics are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Photronics i.e., Photronics and Applied Materials go up and down completely randomly.

Pair Corralation between Photronics and Applied Materials

Given the investment horizon of 90 days Photronics is expected to generate 1.25 times more return on investment than Applied Materials. However, Photronics is 1.25 times more volatile than Applied Materials. It trades about 0.04 of its potential returns per unit of risk. Applied Materials is currently generating about 0.02 per unit of risk. If you would invest  2,001  in Photronics on May 21, 2025 and sell it today you would earn a total of  103.00  from holding Photronics or generate 5.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Photronics  vs.  Applied Materials

Photronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Photronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Photronics may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Applied Materials

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Applied Materials is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Photronics and Applied Materials

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

The idea behind Photronics and Applied Materials 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.