Correlation Between KLA Tencor and LithiumBank Resources
Can any of the company-specific risk be diversified away by investing in both KLA Tencor and LithiumBank Resources 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 LithiumBank Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and LithiumBank Resources Corp, you can compare the effects of market volatilities on KLA Tencor and LithiumBank Resources 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 LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and LithiumBank Resources.
Diversification Opportunities for KLA Tencor and LithiumBank Resources
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KLA and LithiumBank is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources 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 LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of KLA Tencor i.e., KLA Tencor and LithiumBank Resources go up and down completely randomly.
Pair Corralation between KLA Tencor and LithiumBank Resources
Given the investment horizon of 90 days KLA Tencor is expected to generate 0.57 times more return on investment than LithiumBank Resources. However, KLA Tencor is 1.75 times less risky than LithiumBank Resources. It trades about -0.05 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.05 per unit of risk. If you would invest 66,294 in KLA Tencor on September 13, 2024 and sell it today you would lose (1,634) from holding KLA Tencor or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. LithiumBank Resources Corp
Performance |
| Timeline |
| KLA Tencor |
| LithiumBank Resources |
KLA Tencor and LithiumBank Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and LithiumBank Resources
The main advantage of trading using opposite KLA Tencor and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, LithiumBank Resources 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 LithiumBank Resources will offset losses from the drop in LithiumBank Resources' long position.| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
| LithiumBank Resources vs. Qubec Nickel Corp | LithiumBank Resources vs. IGO Limited | LithiumBank Resources vs. Focus Graphite | LithiumBank Resources vs. Mineral Res |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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