Correlation Between KLA and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both KLA and Tokyo Electron 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 KLA and Tokyo Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Corporation and Tokyo Electron Limited, you can compare the effects of market volatilities on KLA and Tokyo Electron 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 KLA with a short position of Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA and Tokyo Electron.
Diversification Opportunities for KLA and Tokyo Electron
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KLA and Tokyo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding KLA Corp. and Tokyo Electron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron and KLA 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 KLA Corporation are associated (or correlated) with Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of KLA i.e., KLA and Tokyo Electron go up and down completely randomly.
Pair Corralation between KLA and Tokyo Electron
Assuming the 90 days horizon KLA Corporation is expected to generate 0.6 times more return on investment than Tokyo Electron. However, KLA Corporation is 1.66 times less risky than Tokyo Electron. It trades about 0.6 of its potential returns per unit of risk. Tokyo Electron Limited is currently generating about 0.3 per unit of risk. If you would invest 61,940 in KLA Corporation on October 25, 2024 and sell it today you would earn a total of 12,150 from holding KLA Corporation or generate 19.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Corp. vs. Tokyo Electron Limited
Performance |
| Timeline |
| KLA Corporation |
| Tokyo Electron |
KLA and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA and Tokyo Electron
The main advantage of trading using opposite KLA and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.| KLA vs. ECHO INVESTMENT ZY | KLA vs. PennantPark Investment | KLA vs. SEI INVESTMENTS | KLA vs. AGNC INVESTMENT |
| Tokyo Electron vs. JAPAN AIRLINES | Tokyo Electron vs. Maple Leaf Foods | Tokyo Electron vs. United Natural Foods | Tokyo Electron vs. COFCO Joycome Foods |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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