Correlation Between Kulicke and Veeco Instruments

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

Diversification Opportunities for Kulicke and Veeco Instruments

0.11

Correlation Coefficient

Kulicke  Veeco Instruments

Average diversification

The 3 months correlation between Kulicke and Veeco is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Veeco Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instruments 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 Veeco Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeco Instruments has no effect on the direction of Kulicke i.e., Kulicke and Veeco Instruments go up and down completely randomly.

Pair Corralation between Kulicke and Veeco Instruments

Given the investment horizon of 90 days Kulicke is expected to generate 4.02 times less return on investment than Veeco Instruments. But when comparing it to its historical volatility, Kulicke and Soffa is 1.38 times less risky than Veeco Instruments. It trades about 0.04 of its potential returns per unit of risk. Veeco Instruments is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,579  in Veeco Instruments on February 13, 2024 and sell it today you would earn a total of  222.00  from holding Veeco Instruments or generate 6.2% return on investment over 90 days.

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

Kulicke and Soffa  vs.  Veeco Instruments

Kulicke and Soffa

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kulicke and Soffa are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Kulicke is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Veeco Instruments

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Kulicke and Veeco Instruments

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

The idea behind Kulicke and Soffa and Veeco Instruments 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.