Correlation Between Kulicke and AXT

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

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

Diversification Opportunities for Kulicke and AXT

-0.52

Correlation Coefficient

Kulicke  AXT

Excellent diversification

The 3 months correlation between Kulicke and AXT is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc and Kulicke 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 Kulicke and Soffa are associated (or correlated) with AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Kulicke i.e., Kulicke and AXT go up and down completely randomly.

Pair Corralation between Kulicke and AXT

Given the investment horizon of 90 days Kulicke and Soffa is expected to under-perform the AXT. But the stock apears to be less risky and, when comparing its historical volatility, Kulicke and Soffa is 2.07 times less risky than AXT. The stock trades about -0.04 of its potential returns per unit of risk. The AXT Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  205.00  in AXT Inc on October 6, 2024 and sell it today you would earn a total of  22.00  from holding AXT Inc or generate 10.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kulicke and Soffa  vs.  AXT Inc

Kulicke and Soffa

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kulicke and Soffa are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Kulicke may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AXT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AXT is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kulicke and AXT

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

The idea behind Kulicke and Soffa and AXT Inc 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.