Correlation Between Micron Technology and Kulicke

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

By analyzing existing cross correlation between Micron Technology and Kulicke and Soffa, you can compare the effects of market volatilities on Micron Technology and Kulicke 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 Micron Technology with a short position of Kulicke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Kulicke.

Diversification Opportunities for Micron Technology and Kulicke

-0.21

Correlation Coefficient

Micron Technology  Kulicke

Very good diversification

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

Pair Corralation between Micron Technology and Kulicke

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Kulicke. In addition to that, Micron Technology is 1.46 times more volatile than Kulicke and Soffa. It trades about -0.13 of its total potential returns per unit of risk. Kulicke and Soffa is currently generating about -0.17 per unit of volatility. 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	95.45%
Values	Daily Returns

Micron Technology  vs.  Kulicke and Soffa

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.

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.

Pair Trading with Micron Technology and Kulicke

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

The idea behind Micron Technology and Kulicke and Soffa 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.

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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 Stocks Directory module to find actively traded stocks across global markets.