Correlation Between Kulicke and ServiceNow

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

Diversification Opportunities for Kulicke and ServiceNow

0.91

Correlation Coefficient

Kulicke  ServiceNow

Almost no diversification

The 3 months correlation between Kulicke and ServiceNow is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Kulicke i.e., Kulicke and ServiceNow go up and down completely randomly.

Pair Corralation between Kulicke and ServiceNow

Given the investment horizon of 90 days Kulicke and Soffa is expected to under-perform the ServiceNow. But the stock apears to be less risky and, when comparing its historical volatility, Kulicke and Soffa is 1.26 times less risky than ServiceNow. The stock trades about -0.25 of its potential returns per unit of risk. The ServiceNow is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  106,770  in ServiceNow on December 30, 2024 and sell it today you would lose (26,994) from holding ServiceNow or give up 25.28% of portfolio value over 90 days.

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

Kulicke and Soffa  vs.  ServiceNow

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.

ServiceNow

Risk-Adjusted Performance

Very Weak

Over the last 90 days ServiceNow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Kulicke and ServiceNow

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

The idea behind Kulicke and Soffa and ServiceNow 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.