Correlation Between Nova and Kulicke

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

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

Diversification Opportunities for Nova and Kulicke

-0.34

Correlation Coefficient

Nova  Kulicke

Very good diversification

The 3 months correlation between Nova and Kulicke is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nova 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 Nova 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 Nova 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 Nova i.e., Nova and Kulicke go up and down completely randomly.

Pair Corralation between Nova and Kulicke

Given the investment horizon of 90 days Nova is expected to under-perform the Kulicke. In addition to that, Nova is 1.45 times more volatile than Kulicke and Soffa. It trades about -0.06 of its total potential returns per unit of risk. Kulicke and Soffa is currently generating about 0.12 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nova  vs.  Kulicke and Soffa

Nova

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Kulicke and Soffa

Risk-Adjusted Performance

9 of 100

Modest

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.

Pair Trading with Nova and Kulicke

The main advantage of trading using opposite Nova and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova 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 Nova 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.