Correlation Between Kulicke and Avient Corp

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

Diversification Opportunities for Kulicke and Avient Corp

0.82

Correlation Coefficient

Kulicke  Avient Corp

Very poor diversification

The 3 months correlation between Kulicke and Avient is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp 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 Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Kulicke i.e., Kulicke and Avient Corp go up and down completely randomly.

Pair Corralation between Kulicke and Avient Corp

Given the investment horizon of 90 days Kulicke and Soffa is expected to generate 1.34 times more return on investment than Avient Corp. However, Kulicke is 1.34 times more volatile than Avient Corp. It trades about 0.12 of its potential returns per unit of risk. Avient Corp is currently generating about 0.09 per unit of risk. If you would invest  4,032  in Kulicke and Soffa on August 31, 2024 and sell it today you would earn a total of  709.00  from holding Kulicke and Soffa or generate 17.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Kulicke and Soffa  vs.  Avient Corp

Kulicke and Soffa

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kulicke and Soffa are ranked lower than 9 (%) 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.

Avient Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Avient Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Kulicke and Avient Corp

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

The idea behind Kulicke and Soffa and Avient Corp 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.