Correlation Between Kulicke and Tesco PLC
Can any of the company-specific risk be diversified away by investing in both Kulicke and Tesco PLC 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 Tesco PLC 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 Tesco PLC, you can compare the effects of market volatilities on Kulicke and Tesco PLC 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 Tesco PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kulicke and Tesco PLC.
Diversification Opportunities for Kulicke and Tesco PLC
Excellent diversification
The 3 months correlation between Kulicke and Tesco is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Tesco PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesco PLC 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 Tesco PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesco PLC has no effect on the direction of Kulicke i.e., Kulicke and Tesco PLC go up and down completely randomly.
Pair Corralation between Kulicke and Tesco PLC
Given the investment horizon of 90 days Kulicke is expected to generate 1.13 times less return on investment than Tesco PLC. In addition to that, Kulicke is 1.05 times more volatile than Tesco PLC. It trades about 0.05 of its total potential returns per unit of risk. Tesco PLC is currently generating about 0.06 per unit of volatility. If you would invest 391.00 in Tesco PLC on August 28, 2024 and sell it today you would earn a total of 58.00 from holding Tesco PLC or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kulicke and Soffa vs. Tesco PLC
Performance |
| Timeline |
| Kulicke and Soffa |
| Tesco PLC |
Kulicke and Tesco PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kulicke and Tesco PLC
The main advantage of trading using opposite Kulicke and Tesco PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kulicke position performs unexpectedly, Tesco PLC 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 Tesco PLC will offset losses from the drop in Tesco PLC's long position.The idea behind Kulicke and Soffa and Tesco PLC 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.| Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Carrefour SA PK | Tesco PLC vs. J Sainsbury PLC | Tesco PLC vs. Tesco PLC |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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