Correlation Between Kulicke and Photronics
Can any of the company-specific risk be diversified away by investing in both Kulicke 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 Kulicke and Photronics 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 Photronics, you can compare the effects of market volatilities on Kulicke 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 Kulicke with a short position of Photronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kulicke and Photronics.
Diversification Opportunities for Kulicke and Photronics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kulicke and Photronics is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics 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 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 Kulicke i.e., Kulicke and Photronics go up and down completely randomly.
Pair Corralation between Kulicke and Photronics
Given the investment horizon of 90 days Kulicke and Soffa is expected to generate 1.03 times more return on investment than Photronics. However, Kulicke is 1.03 times more volatile than Photronics. It trades about 0.03 of its potential returns per unit of risk. Photronics is currently generating about -0.02 per unit of risk. If you would invest 4,635 in Kulicke and Soffa on August 24, 2024 and sell it today you would earn a total of 211.00 from holding Kulicke and Soffa or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kulicke and Soffa vs. Photronics
Performance |
| Timeline |
| Kulicke and Soffa |
| Photronics |
Kulicke and Photronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kulicke and Photronics
The main advantage of trading using opposite Kulicke and Photronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kulicke 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.| Kulicke vs. Ultra Clean Holdings | Kulicke vs. Ichor Holdings | Kulicke vs. Entegris | Kulicke vs. Amtech Systems |
| Photronics vs. Aehr Test Systems | Photronics vs. Lam Research Corp | Photronics vs. KLA Tencor | Photronics vs. Kulicke and Soffa |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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