Correlation Between KLA Tencor and Micro-Mechanics (Holdings)
Can any of the company-specific risk be diversified away by investing in both KLA Tencor and Micro-Mechanics (Holdings) 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 (Holdings) 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 (Holdings) 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 (Holdings). Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Micro-Mechanics (Holdings).
Diversification Opportunities for KLA Tencor and Micro-Mechanics (Holdings)
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KLA and Micro-Mechanics is -0.85. 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 (Holdings) 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 (Holdings). 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 (Holdings) has no effect on the direction of KLA Tencor i.e., KLA Tencor and Micro-Mechanics (Holdings) go up and down completely randomly.
Pair Corralation between KLA Tencor and Micro-Mechanics (Holdings)
Given the investment horizon of 90 days KLA Tencor is expected to under-perform the Micro-Mechanics (Holdings). But the stock apears to be less risky and, when comparing its historical volatility, KLA Tencor is 1.16 times less risky than Micro-Mechanics (Holdings). The stock trades about -0.14 of its potential returns per unit of risk. The Micro Mechanics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Micro Mechanics on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Micro Mechanics or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
KLA Tencor vs. Micro Mechanics
Performance |
| Timeline |
| KLA Tencor |
| Micro-Mechanics (Holdings) |
KLA Tencor and Micro-Mechanics (Holdings) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Micro-Mechanics (Holdings)
The main advantage of trading using opposite KLA Tencor and Micro-Mechanics (Holdings) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, Micro-Mechanics (Holdings) 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 (Holdings) will offset losses from the drop in Micro-Mechanics (Holdings)'s long position.| KLA Tencor vs. First Solar | KLA Tencor vs. Sunrun Inc | KLA Tencor vs. Canadian Solar | KLA Tencor vs. SolarEdge Technologies |
| Micro-Mechanics (Holdings) vs. ASML Holding NV | Micro-Mechanics (Holdings) vs. ASML Holding NV | Micro-Mechanics (Holdings) vs. Applied Materials | Micro-Mechanics (Holdings) 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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