Correlation Between KLA Tencor and Photronics
Can any of the company-specific risk be diversified away by investing in both KLA Tencor and Photronics 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 Photronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Photronics, you can compare the effects of market volatilities on KLA Tencor and Photronics 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 Photronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Photronics.
Diversification Opportunities for KLA Tencor and Photronics
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KLA and Photronics is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics 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 Photronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photronics has no effect on the direction of KLA Tencor i.e., KLA Tencor and Photronics go up and down completely randomly.
Pair Corralation between KLA Tencor and Photronics
Given the investment horizon of 90 days KLA Tencor is expected to under-perform the Photronics. In addition to that, KLA Tencor is 1.07 times more volatile than Photronics. It trades about -0.01 of its total potential returns per unit of risk. Photronics is currently generating about -0.01 per unit of volatility. If you would invest 2,393 in Photronics on October 31, 2024 and sell it today you would lose (111.00) from holding Photronics or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. Photronics
Performance |
| Timeline |
| KLA Tencor |
| Photronics |
KLA Tencor and Photronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Photronics
The main advantage of trading using opposite KLA Tencor and Photronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, Photronics 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 Photronics will offset losses from the drop in Photronics' long position.| KLA Tencor vs. Diodes Incorporated | KLA Tencor vs. Daqo New Energy | KLA Tencor vs. Micron Technology | KLA Tencor vs. MagnaChip Semiconductor |
| Photronics vs. Diodes Incorporated | Photronics vs. Daqo New Energy | Photronics vs. Micron Technology | Photronics vs. MagnaChip Semiconductor |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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