Correlation Between Foremost Lithium and Kulicke

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

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

Diversification Opportunities for Foremost Lithium and Kulicke

-0.44

Correlation Coefficient

Foremost Lithium  Kulicke

Very good diversification

The 3 months correlation between Foremost and Kulicke is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Foremost Lithium Resource 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 Foremost Lithium 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 Foremost Lithium Resource 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 Foremost Lithium i.e., Foremost Lithium and Kulicke go up and down completely randomly.

Pair Corralation between Foremost Lithium and Kulicke

Assuming the 90 days horizon Foremost Lithium Resource is expected to generate 7.13 times more return on investment than Kulicke. However, Foremost Lithium is 7.13 times more volatile than Kulicke and Soffa. It trades about 0.11 of its potential returns per unit of risk. Kulicke and Soffa is currently generating about 0.18 per unit of risk. If you would invest  27.00  in Foremost Lithium Resource on September 12, 2024 and sell it today you would earn a total of  5.00  from holding Foremost Lithium Resource or generate 18.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	44.44%
Values	Daily Returns

Foremost Lithium Resource  vs.  Kulicke and Soffa

Foremost Lithium Resource

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Foremost Lithium Resource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Foremost Lithium showed solid returns over the last few months and may actually be approaching a breakup point.

Kulicke and Soffa

Risk-Adjusted Performance

13 of 100

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 weak forward indicators, Kulicke exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Foremost Lithium and Kulicke

The main advantage of trading using opposite Foremost Lithium and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foremost Lithium 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 Foremost Lithium Resource 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.