Correlation Between Kulicke and Micron Technology

Can any of the company-specific risk be diversified away by investing in both Kulicke and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on Kulicke and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kulicke and Micron Technology.

Diversification Opportunities for Kulicke and Micron Technology

-0.21

Correlation Coefficient

Kulicke  Micron Technology

Very good diversification

The 3 months correlation between Kulicke and Micron is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Kulicke i.e., Kulicke and Micron Technology go up and down completely randomly.

Pair Corralation between Kulicke and Micron Technology

Given the investment horizon of 90 days Kulicke and Soffa is expected to generate 0.67 times more return on investment than Micron Technology. However, Kulicke and Soffa is 1.5 times less risky than Micron Technology. It trades about -0.17 of its potential returns per unit of risk. Micron Technology is currently generating about -0.13 per unit of risk. If you would invest  5,047  in Kulicke and Soffa on January 31, 2024 and sell it today you would lose (331.00) from holding Kulicke and Soffa or give up 6.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kulicke and Soffa  vs.  Micron Technology

Kulicke and Soffa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kulicke and Soffa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Kulicke is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Micron Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kulicke and Micron Technology

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

The idea behind Kulicke and Soffa and Micron Technology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.