Correlation Between Applied Materials and Kontrol Technologies

Can any of the company-specific risk be diversified away by investing in both Applied Materials and Kontrol Technologies 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 Applied Materials and Kontrol Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Materials and Kontrol Technologies Corp, you can compare the effects of market volatilities on Applied Materials and Kontrol Technologies 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 Applied Materials with a short position of Kontrol Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Kontrol Technologies.

Diversification Opportunities for Applied Materials and Kontrol Technologies

-0.03

Correlation Coefficient

Applied Materials  Kontrol Technologies

Good diversification

The 3 months correlation between Applied and Kontrol is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Kontrol Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontrol Technologies Corp and Applied Materials 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 Applied Materials are associated (or correlated) with Kontrol Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontrol Technologies Corp has no effect on the direction of Applied Materials i.e., Applied Materials and Kontrol Technologies go up and down completely randomly.

Pair Corralation between Applied Materials and Kontrol Technologies

Assuming the 90 days horizon Applied Materials is expected to generate 0.56 times more return on investment than Kontrol Technologies. However, Applied Materials is 1.79 times less risky than Kontrol Technologies. It trades about 0.08 of its potential returns per unit of risk. Kontrol Technologies Corp is currently generating about 0.0 per unit of risk. If you would invest  13,883  in Applied Materials on March 28, 2025 and sell it today you would earn a total of  1,815  from holding Applied Materials or generate 13.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Applied Materials  vs.  Kontrol Technologies Corp

Applied Materials

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Applied Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Kontrol Technologies Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kontrol Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kontrol Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Applied Materials and Kontrol Technologies

The main advantage of trading using opposite Applied Materials and Kontrol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Kontrol Technologies 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 Kontrol Technologies will offset losses from the drop in Kontrol Technologies' long position.

The idea behind Applied Materials and Kontrol Technologies Corp 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.