Correlation Between KLA Tencor and Micro Mechanics
Can any of the company-specific risk be diversified away by investing in both KLA Tencor and Micro Mechanics 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 Micro Mechanics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Micro Mechanics, you can compare the effects of market volatilities on KLA Tencor and Micro Mechanics 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 Micro Mechanics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Micro Mechanics.
Diversification Opportunities for KLA Tencor and Micro Mechanics
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KLA and Micro is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Micro Mechanics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Mechanics 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 Micro Mechanics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Mechanics has no effect on the direction of KLA Tencor i.e., KLA Tencor and Micro Mechanics go up and down completely randomly.
Pair Corralation between KLA Tencor and Micro Mechanics
Given the investment horizon of 90 days KLA Tencor is expected to under-perform the Micro Mechanics. In addition to that, KLA Tencor is 2.21 times more volatile than Micro Mechanics. It trades about -0.11 of its total potential returns per unit of risk. Micro Mechanics is currently generating about 0.13 per unit of volatility. If you would invest 114.00 in Micro Mechanics on August 23, 2024 and sell it today you would earn a total of 3.00 from holding Micro Mechanics or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. Micro Mechanics
Performance |
| Timeline |
| KLA Tencor |
| Micro Mechanics |
KLA Tencor and Micro Mechanics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Micro Mechanics
The main advantage of trading using opposite KLA Tencor and Micro Mechanics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, Micro Mechanics 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 Micro Mechanics will offset losses from the drop in Micro Mechanics' long position.| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
| Micro Mechanics vs. ASML Holding NV | Micro Mechanics vs. ASML Holding NV | Micro Mechanics vs. Applied Materials | Micro Mechanics vs. Lam Research Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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