Correlation Between KLA Tencor and Renesas Electronics
Can any of the company-specific risk be diversified away by investing in both KLA Tencor and Renesas Electronics 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 Renesas Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Renesas Electronics, you can compare the effects of market volatilities on KLA Tencor and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Renesas Electronics.
Diversification Opportunities for KLA Tencor and Renesas Electronics
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KLA and Renesas is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of KLA Tencor i.e., KLA Tencor and Renesas Electronics go up and down completely randomly.
Pair Corralation between KLA Tencor and Renesas Electronics
Given the investment horizon of 90 days KLA Tencor is expected to generate 0.58 times more return on investment than Renesas Electronics. However, KLA Tencor is 1.73 times less risky than Renesas Electronics. It trades about 0.06 of its potential returns per unit of risk. Renesas Electronics is currently generating about 0.01 per unit of risk. If you would invest 56,182 in KLA Tencor on November 9, 2024 and sell it today you would earn a total of 20,000 from holding KLA Tencor or generate 35.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.51% |
| Values | Daily Returns |
KLA Tencor vs. Renesas Electronics
Performance |
| Timeline |
| KLA Tencor |
| Renesas Electronics |
KLA Tencor and Renesas Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Renesas Electronics
The main advantage of trading using opposite KLA Tencor and Renesas Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, Renesas Electronics 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 Renesas Electronics will offset losses from the drop in Renesas Electronics' long position.| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
| Renesas Electronics vs. Power Integrations | Renesas Electronics vs. Rohm Co Ltd | Renesas Electronics vs. MACOM Technology Solutions | Renesas Electronics vs. Renesas Electronics 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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