Correlation Between Iridium Communications and Kulicke
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Kulicke 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 Iridium Communications and Kulicke into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Kulicke and Soffa, you can compare the effects of market volatilities on Iridium Communications and Kulicke 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 Iridium Communications with a short position of Kulicke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Kulicke.
Diversification Opportunities for Iridium Communications and Kulicke
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Iridium and Kulicke is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Kulicke and Soffa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kulicke and Soffa and Iridium Communications 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 Iridium Communications are associated (or correlated) with Kulicke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kulicke and Soffa has no effect on the direction of Iridium Communications i.e., Iridium Communications and Kulicke go up and down completely randomly.
Pair Corralation between Iridium Communications and Kulicke
Given the investment horizon of 90 days Iridium Communications is expected to generate 2.64 times less return on investment than Kulicke. In addition to that, Iridium Communications is 1.08 times more volatile than Kulicke and Soffa. It trades about 0.07 of its total potential returns per unit of risk. Kulicke and Soffa is currently generating about 0.21 per unit of volatility. If you would invest 4,592 in Kulicke and Soffa on September 4, 2024 and sell it today you would earn a total of 462.00 from holding Kulicke and Soffa or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Kulicke and Soffa
Performance |
| Timeline |
| Iridium Communications |
| Kulicke and Soffa |
Iridium Communications and Kulicke Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Kulicke
The main advantage of trading using opposite Iridium Communications and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, Kulicke 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 Kulicke will offset losses from the drop in Kulicke's long position.| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
| Kulicke vs. NXP Semiconductors NV | Kulicke vs. Analog Devices | Kulicke vs. Monolithic Power Systems | Kulicke vs. ON Semiconductor |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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