Correlation Between Amkor Technology and Alto Ingredients

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

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

Diversification Opportunities for Amkor Technology and Alto Ingredients

-0.07

Correlation Coefficient

Amkor Technology  Alto Ingredients

Good diversification

The 3 months correlation between Amkor and Alto is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and Alto Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alto Ingredients and Amkor Technology 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 Amkor Technology are associated (or correlated) with Alto Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alto Ingredients has no effect on the direction of Amkor Technology i.e., Amkor Technology and Alto Ingredients go up and down completely randomly.

Pair Corralation between Amkor Technology and Alto Ingredients

Given the investment horizon of 90 days Amkor Technology is expected to generate 0.86 times more return on investment than Alto Ingredients. However, Amkor Technology is 1.16 times less risky than Alto Ingredients. It trades about 0.07 of its potential returns per unit of risk. Alto Ingredients is currently generating about -0.14 per unit of risk. If you would invest  3,028  in Amkor Technology on February 28, 2024 and sell it today you would earn a total of  282.00  from holding Amkor Technology or generate 9.31% return on investment over 90 days.

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

Amkor Technology  vs.  Alto Ingredients

Amkor Technology

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amkor Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward-looking signals, Amkor Technology may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Alto Ingredients

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alto Ingredients has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Amkor Technology and Alto Ingredients

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

The idea behind Amkor Technology and Alto Ingredients 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.