Correlation Between Kulicke and Lam Research

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

Diversification Opportunities for Kulicke and Lam Research

-0.58

Correlation Coefficient

Kulicke  Lam Research

Excellent diversification

The 3 months correlation between Kulicke and Lam is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Lam Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research Corp 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 Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research Corp has no effect on the direction of Kulicke i.e., Kulicke and Lam Research go up and down completely randomly.

Pair Corralation between Kulicke and Lam Research

Given the investment horizon of 90 days Kulicke and Soffa is expected to under-perform the Lam Research. But the stock apears to be less risky and, when comparing its historical volatility, Kulicke and Soffa is 1.4 times less risky than Lam Research. The stock trades about -0.17 of its potential returns per unit of risk. The Lam Research Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,365  in Lam Research Corp on November 28, 2024 and sell it today you would earn a total of  664.00  from holding Lam Research Corp or generate 9.02% 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.  Lam Research Corp

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lam Research Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lam Research Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Lam Research may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Kulicke and Lam Research

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

The idea behind Kulicke and Soffa and Lam Research Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.