Correlation Between KLA Tencor and Camtek

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

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

Diversification Opportunities for KLA Tencor and Camtek

0.47

Correlation Coefficient

KLA Tencor  Camtek

Very weak diversification

The 3 months correlation between KLA and Camtek is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Camtek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camtek and KLA Tencor 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 KLA Tencor are associated (or correlated) with Camtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camtek has no effect on the direction of KLA Tencor i.e., KLA Tencor and Camtek go up and down completely randomly.

Pair Corralation between KLA Tencor and Camtek

Given the investment horizon of 90 days KLA Tencor is expected to under-perform the Camtek. But the stock apears to be less risky and, when comparing its historical volatility, KLA Tencor is 1.38 times less risky than Camtek. The stock trades about -0.07 of its potential returns per unit of risk. The Camtek is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  8,113  in Camtek on September 13, 2024 and sell it today you would lose (736.00) from holding Camtek or give up 9.07% of portfolio value over 90 days.

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

KLA Tencor  vs.  Camtek

KLA Tencor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KLA Tencor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Camtek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camtek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Camtek is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KLA Tencor and Camtek

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

The idea behind KLA Tencor and Camtek 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.