Correlation Between KLA Tencor and Carbon Revolution
Can any of the company-specific risk be diversified away by investing in both KLA Tencor and Carbon Revolution 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 Carbon Revolution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Carbon Revolution Public, you can compare the effects of market volatilities on KLA Tencor and Carbon Revolution 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 Carbon Revolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Carbon Revolution.
Diversification Opportunities for KLA Tencor and Carbon Revolution
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KLA and Carbon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Carbon Revolution Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Revolution Public 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 Carbon Revolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Revolution Public has no effect on the direction of KLA Tencor i.e., KLA Tencor and Carbon Revolution go up and down completely randomly.
Pair Corralation between KLA Tencor and Carbon Revolution
Given the investment horizon of 90 days KLA Tencor is expected to generate 0.23 times more return on investment than Carbon Revolution. However, KLA Tencor is 4.27 times less risky than Carbon Revolution. It trades about 0.33 of its potential returns per unit of risk. Carbon Revolution Public is currently generating about -0.08 per unit of risk. If you would invest 63,012 in KLA Tencor on November 1, 2024 and sell it today you would earn a total of 10,465 from holding KLA Tencor or generate 16.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. Carbon Revolution Public
Performance |
| Timeline |
| KLA Tencor |
| Carbon Revolution Public |
KLA Tencor and Carbon Revolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Carbon Revolution
The main advantage of trading using opposite KLA Tencor and Carbon Revolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, Carbon Revolution 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 Carbon Revolution will offset losses from the drop in Carbon Revolution's long position.| KLA Tencor vs. Diodes Incorporated | KLA Tencor vs. Daqo New Energy | KLA Tencor vs. Micron Technology | KLA Tencor vs. MagnaChip Semiconductor |
| Carbon Revolution vs. Globalfoundries | Carbon Revolution vs. KLA Tencor | Carbon Revolution vs. Teradyne | Carbon Revolution vs. Balchem |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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