Correlation Between Kulicke and Globalfoundries

Can any of the company-specific risk be diversified away by investing in both Kulicke and Globalfoundries 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 Globalfoundries 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 Globalfoundries, you can compare the effects of market volatilities on Kulicke and Globalfoundries 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 Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kulicke and Globalfoundries.

Diversification Opportunities for Kulicke and Globalfoundries

0.68

Correlation Coefficient

Kulicke  Globalfoundries

Poor diversification

The 3 months correlation between Kulicke and Globalfoundries is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Kulicke i.e., Kulicke and Globalfoundries go up and down completely randomly.

Pair Corralation between Kulicke and Globalfoundries

Given the investment horizon of 90 days Kulicke and Soffa is expected to under-perform the Globalfoundries. But the stock apears to be less risky and, when comparing its historical volatility, Kulicke and Soffa is 1.62 times less risky than Globalfoundries. The stock trades about -0.36 of its potential returns per unit of risk. The Globalfoundries is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  4,140  in Globalfoundries on December 4, 2024 and sell it today you would lose (336.00) from holding Globalfoundries or give up 8.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Kulicke and Soffa  vs.  Globalfoundries

Kulicke and Soffa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kulicke and Soffa 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 forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Globalfoundries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globalfoundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kulicke and Globalfoundries

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

The idea behind Kulicke and Soffa and Globalfoundries 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.