Correlation Between Kulicke and Seadrill

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

Diversification Opportunities for Kulicke and Seadrill

0.1

Correlation Coefficient

Kulicke  Seadrill

Average diversification

The 3 months correlation between Kulicke and Seadrill is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited 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 Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Kulicke i.e., Kulicke and Seadrill go up and down completely randomly.

Pair Corralation between Kulicke and Seadrill

Given the investment horizon of 90 days Kulicke is expected to generate 1.34 times less return on investment than Seadrill. But when comparing it to its historical volatility, Kulicke and Soffa is 1.06 times less risky than Seadrill. It trades about 0.02 of its potential returns per unit of risk. Seadrill Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,024  in Seadrill Limited on September 23, 2024 and sell it today you would earn a total of  608.00  from holding Seadrill Limited or generate 20.11% return on investment over 90 days.

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

Kulicke and Soffa  vs.  Seadrill Limited

Kulicke and Soffa

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kulicke and Soffa are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Kulicke exhibited solid returns over the last few months and may actually be approaching a breakup point.

Seadrill Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seadrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kulicke and Seadrill

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

The idea behind Kulicke and Soffa and Seadrill Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.