Correlation Between Kulicke and Lumentum Holdings
Can any of the company-specific risk be diversified away by investing in both Kulicke and Lumentum 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 Kulicke and Lumentum Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kulicke and Soffa and Lumentum Holdings, you can compare the effects of market volatilities on Kulicke and Lumentum 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 Kulicke with a short position of Lumentum Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kulicke and Lumentum Holdings.
Diversification Opportunities for Kulicke and Lumentum Holdings
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kulicke and Lumentum is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Lumentum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumentum Holdings and Kulicke 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 Kulicke and Soffa are associated (or correlated) with Lumentum Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumentum Holdings has no effect on the direction of Kulicke i.e., Kulicke and Lumentum Holdings go up and down completely randomly.
Pair Corralation between Kulicke and Lumentum Holdings
Given the investment horizon of 90 days Kulicke is expected to generate 3.69 times less return on investment than Lumentum Holdings. But when comparing it to its historical volatility, Kulicke and Soffa is 1.84 times less risky than Lumentum Holdings. It trades about 0.18 of its potential returns per unit of risk. Lumentum Holdings is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 6,496 in Lumentum Holdings on August 28, 2024 and sell it today you would earn a total of 2,224 from holding Lumentum Holdings or generate 34.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kulicke and Soffa vs. Lumentum Holdings
Performance |
| Timeline |
| Kulicke and Soffa |
| Lumentum Holdings |
Kulicke and Lumentum Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kulicke and Lumentum Holdings
The main advantage of trading using opposite Kulicke and Lumentum Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kulicke position performs unexpectedly, Lumentum 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 Lumentum Holdings will offset losses from the drop in Lumentum Holdings' long position.The idea behind Kulicke and Soffa and Lumentum Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lumentum Holdings vs. Ichor Holdings | Lumentum Holdings vs. Fabrinet | Lumentum Holdings vs. Hello Group | Lumentum Holdings vs. Ultra Clean Holdings |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |