Correlation Between Delek Drilling and Kulicke

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

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

Diversification Opportunities for Delek Drilling and Kulicke

0.6

Correlation Coefficient

Delek Drilling  Kulicke

Poor diversification

The 3 months correlation between Delek and Kulicke is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling 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 Delek Drilling 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 Delek Drilling 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 Delek Drilling i.e., Delek Drilling and Kulicke go up and down completely randomly.

Pair Corralation between Delek Drilling and Kulicke

Assuming the 90 days horizon Delek Drilling is expected to generate 1.49 times less return on investment than Kulicke. In addition to that, Delek Drilling is 1.0 times more volatile than Kulicke and Soffa. It trades about 0.12 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  3,958  in Kulicke and Soffa on September 5, 2024 and sell it today you would earn a total of  1,078  from holding Kulicke and Soffa or generate 27.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Delek Drilling   vs.  Kulicke and Soffa

Delek Drilling

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Kulicke and Soffa

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kulicke and Soffa are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Kulicke exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek Drilling and Kulicke

The main advantage of trading using opposite Delek Drilling and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Drilling 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 Delek Drilling 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.