Correlation Between KLA Tencor and Amkor Technology

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

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

Diversification Opportunities for KLA Tencor and Amkor Technology

0.79

Correlation Coefficient

KLA Tencor  Amkor Technology

Poor diversification

The 3 months correlation between KLA and Amkor is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and KLA Tencor 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 KLA Tencor are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of KLA Tencor i.e., KLA Tencor and Amkor Technology go up and down completely randomly.

Pair Corralation between KLA Tencor and Amkor Technology

Given the investment horizon of 90 days KLA Tencor is expected to generate 0.88 times more return on investment than Amkor Technology. However, KLA Tencor is 1.14 times less risky than Amkor Technology. It trades about 0.05 of its potential returns per unit of risk. Amkor Technology is currently generating about 0.0 per unit of risk. If you would invest  41,135  in KLA Tencor on October 4, 2024 and sell it today you would earn a total of  22,264  from holding KLA Tencor or generate 54.12% return on investment over 90 days.

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

KLA Tencor  vs.  Amkor Technology

KLA Tencor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KLA Tencor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Amkor Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with KLA Tencor and Amkor Technology

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

The idea behind KLA Tencor and Amkor Technology 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.