Correlation Between KLA Tencor and Advantest
Can any of the company-specific risk be diversified away by investing in both KLA Tencor and Advantest 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 Tencor and Advantest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Advantest, you can compare the effects of market volatilities on KLA Tencor and Advantest 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 Tencor with a short position of Advantest. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Advantest.
Diversification Opportunities for KLA Tencor and Advantest
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KLA and Advantest is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Advantest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantest and KLA Tencor 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 Tencor are associated (or correlated) with Advantest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantest has no effect on the direction of KLA Tencor i.e., KLA Tencor and Advantest go up and down completely randomly.
Pair Corralation between KLA Tencor and Advantest
Given the investment horizon of 90 days KLA Tencor is expected to under-perform the Advantest. But the stock apears to be less risky and, when comparing its historical volatility, KLA Tencor is 1.79 times less risky than Advantest. The stock trades about -0.07 of its potential returns per unit of risk. The Advantest is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,104 in Advantest on August 24, 2024 and sell it today you would earn a total of 1,146 from holding Advantest or generate 22.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
KLA Tencor vs. Advantest
Performance |
| Timeline |
| KLA Tencor |
| Advantest |
KLA Tencor and Advantest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Advantest
The main advantage of trading using opposite KLA Tencor and Advantest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, Advantest 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 Advantest will offset losses from the drop in Advantest's long position.| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
| Advantest vs. Tokyo Electron | Advantest vs. Ultra Clean Holdings | Advantest vs. Applied Materials | Advantest vs. Sumco Corp ADR |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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