Correlation Between KLA Tencor and Turning Point

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

Diversification Opportunities for KLA Tencor and Turning Point

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between KLA and Turning is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Turning Point Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turning Point Brands 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 Turning Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turning Point Brands has no effect on the direction of KLA Tencor i.e., KLA Tencor and Turning Point go up and down completely randomly.

Pair Corralation between KLA Tencor and Turning Point

Given the investment horizon of 90 days KLA Tencor is expected to generate 1.95 times less return on investment than Turning Point. In addition to that, KLA Tencor is 1.21 times more volatile than Turning Point Brands. It trades about 0.05 of its total potential returns per unit of risk. Turning Point Brands is currently generating about 0.11 per unit of volatility. If you would invest  2,157  in Turning Point Brands on October 4, 2024 and sell it today you would earn a total of  3,913  from holding Turning Point Brands or generate 181.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

KLA Tencor  vs.  Turning Point Brands

 Performance 
       Timeline  
KLA Tencor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Turning Point Brands 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Turning Point sustained solid returns over the last few months and may actually be approaching a breakup point.

KLA Tencor and Turning Point Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KLA Tencor and Turning Point

The main advantage of trading using opposite KLA Tencor and Turning Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, Turning Point 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 Turning Point will offset losses from the drop in Turning Point's long position.
The idea behind KLA Tencor and Turning Point Brands 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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