Correlation Between ASM International and KLA Tencor

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Can any of the company-specific risk be diversified away by investing in both ASM International and KLA Tencor 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 ASM International and KLA Tencor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASM International NV and KLA Tencor, you can compare the effects of market volatilities on ASM International and KLA Tencor 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 ASM International with a short position of KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASM International and KLA Tencor.

Diversification Opportunities for ASM International and KLA Tencor

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between ASM and KLA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ASM International NV and KLA-Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA-Tencor and ASM International 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 ASM International NV are associated (or correlated) with KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA-Tencor has no effect on the direction of ASM International i.e., ASM International and KLA Tencor go up and down completely randomly.

Pair Corralation between ASM International and KLA Tencor

Assuming the 90 days horizon ASM International NV is expected to generate 1.01 times more return on investment than KLA Tencor. However, ASM International is 1.01 times more volatile than KLA Tencor. It trades about 0.09 of its potential returns per unit of risk. KLA Tencor is currently generating about 0.08 per unit of risk. If you would invest  60,180  in ASM International NV on December 29, 2023 and sell it today you would earn a total of  2,320  from holding ASM International NV or generate 3.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.65%
ValuesDaily Returns

ASM International NV  vs.  KLA-Tencor

 Performance 
       Timeline  
ASM International 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ASM International NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, ASM International reported solid returns over the last few months and may actually be approaching a breakup point.
KLA-Tencor 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in KLA Tencor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, KLA Tencor exhibited solid returns over the last few months and may actually be approaching a breakup point.

ASM International and KLA Tencor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ASM International and KLA Tencor

The main advantage of trading using opposite ASM International and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASM International position performs unexpectedly, KLA Tencor 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 KLA Tencor will offset losses from the drop in KLA Tencor's long position.
The idea behind ASM International NV and KLA Tencor 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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