Correlation Between Crown LNG and KLA Tencor

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

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

Diversification Opportunities for Crown LNG and KLA Tencor

0.1

Correlation Coefficient

Crown LNG  KLA Tencor

Average diversification

The 3 months correlation between Crown and KLA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Crown LNG Holdings and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor and Crown LNG 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 Crown LNG Holdings 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 Crown LNG i.e., Crown LNG and KLA Tencor go up and down completely randomly.

Pair Corralation between Crown LNG and KLA Tencor

Given the investment horizon of 90 days Crown LNG Holdings is expected to generate 6.14 times more return on investment than KLA Tencor. However, Crown LNG is 6.14 times more volatile than KLA Tencor. It trades about 0.02 of its potential returns per unit of risk. KLA Tencor is currently generating about 0.09 per unit of risk. If you would invest  33.00  in Crown LNG Holdings on December 25, 2024 and sell it today you would lose (8.93) from holding Crown LNG Holdings or give up 27.06% of portfolio value over 90 days.

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

Crown LNG Holdings  vs.  KLA Tencor

Crown LNG Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crown LNG Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, Crown LNG unveiled solid returns over the last few months and may actually be approaching a breakup point.

KLA Tencor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KLA Tencor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, KLA Tencor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crown LNG and KLA Tencor

The main advantage of trading using opposite Crown LNG and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown LNG 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 Crown LNG Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.