Correlation Between Information Services and Amkor Technology

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

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

Diversification Opportunities for Information Services and Amkor Technology

0.34

Correlation Coefficient

Information Services  Amkor Technology

Weak diversification

The 3 months correlation between Information and Amkor is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Group and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Information Services 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 Information Services Group are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of Information Services i.e., Information Services and Amkor Technology go up and down completely randomly.

Pair Corralation between Information Services and Amkor Technology

Considering the 90-day investment horizon Information Services Group is expected to under-perform the Amkor Technology. But the stock apears to be less risky and, when comparing its historical volatility, Information Services Group is 1.92 times less risky than Amkor Technology. The stock trades about -0.44 of its potential returns per unit of risk. The Amkor Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,181  in Amkor Technology on January 31, 2024 and sell it today you would lose (34.00) from holding Amkor Technology or give up 1.07% of portfolio value over 90 days.

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

Information Services Group  vs.  Amkor Technology

Information Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Information Services Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Amkor Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Amkor Technology is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Information Services and Amkor Technology

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

The idea behind Information Services Group and Amkor Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.