Correlation Between Kulicke and Sea

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

Diversification Opportunities for Kulicke and Sea

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Kulicke and Sea is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Kulicke i.e., Kulicke and Sea go up and down completely randomly.

Pair Corralation between Kulicke and Sea

Given the investment horizon of 90 days Kulicke is expected to generate 1.61 times less return on investment than Sea. In addition to that, Kulicke is 1.02 times more volatile than Sea. It trades about 0.17 of its total potential returns per unit of risk. Sea is currently generating about 0.28 per unit of volatility. If you would invest  7,872  in Sea on September 5, 2024 and sell it today you would earn a total of  3,869  from holding Sea or generate 49.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Kulicke and Soffa  vs.  Sea

 Performance 
       Timeline  
Kulicke and Soffa 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
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.
Sea 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kulicke and Sea Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kulicke and Sea

The main advantage of trading using opposite Kulicke and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kulicke position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.
The idea behind Kulicke and Soffa and Sea 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.
Check out your portfolio center.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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