Correlation Between Montauk Renewables and Kulicke

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

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

Diversification Opportunities for Montauk Renewables and Kulicke

0.69

Correlation Coefficient

Montauk Renewables  Kulicke

Poor diversification

The 3 months correlation between Montauk and Kulicke is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Kulicke and Soffa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kulicke and Soffa and Montauk Renewables 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 Montauk Renewables are associated (or correlated) with Kulicke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kulicke and Soffa has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Kulicke go up and down completely randomly.

Pair Corralation between Montauk Renewables and Kulicke

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Kulicke. In addition to that, Montauk Renewables is 2.84 times more volatile than Kulicke and Soffa. It trades about -0.13 of its total potential returns per unit of risk. Kulicke and Soffa is currently generating about -0.22 per unit of volatility. If you would invest  4,717  in Kulicke and Soffa on December 23, 2024 and sell it today you would lose (1,141) from holding Kulicke and Soffa or give up 24.19% of portfolio value over 90 days.

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

Montauk Renewables  vs.  Kulicke and Soffa

Montauk Renewables

Risk-Adjusted Performance

Very Weak

Over the last 90 days Montauk Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with Montauk Renewables and Kulicke

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

The idea behind Montauk Renewables and Kulicke and Soffa 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.