Correlation Between KLA Tencor and 049560AX3

Can any of the company-specific risk be diversified away by investing in both KLA Tencor and 049560AX3 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 049560AX3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KLA Tencor and ATO 545 15 OCT 32, you can compare the effects of market volatilities on KLA Tencor and 049560AX3 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 049560AX3. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and 049560AX3.

Diversification Opportunities for KLA Tencor and 049560AX3

-0.49

Correlation Coefficient

KLA Tencor  049560AX3

Very good diversification

The 3 months correlation between KLA and 049560AX3 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and ATO 545 15 OCT 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATO 545 15 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 049560AX3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATO 545 15 has no effect on the direction of KLA Tencor i.e., KLA Tencor and 049560AX3 go up and down completely randomly.

Pair Corralation between KLA Tencor and 049560AX3

Given the investment horizon of 90 days KLA Tencor is expected to generate 4.2 times more return on investment than 049560AX3. However, KLA Tencor is 4.2 times more volatile than ATO 545 15 OCT 32. It trades about -0.08 of its potential returns per unit of risk. ATO 545 15 OCT 32 is currently generating about -0.35 per unit of risk. If you would invest  75,160  in KLA Tencor on October 1, 2024 and sell it today you would lose (10,679) from holding KLA Tencor or give up 14.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.33%
Values	Daily Returns

KLA Tencor  vs.  ATO 545 15 OCT 32

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ATO 545 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATO 545 15 OCT 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for ATO 545 15 OCT 32 investors.

Pair Trading with KLA Tencor and 049560AX3

The main advantage of trading using opposite KLA Tencor and 049560AX3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, 049560AX3 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 049560AX3 will offset losses from the drop in 049560AX3's long position.

The idea behind KLA Tencor and ATO 545 15 OCT 32 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.