Correlation Between NETGEAR and Kulicke

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

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

Diversification Opportunities for NETGEAR and Kulicke

0.81

Correlation Coefficient

NETGEAR  Kulicke

Very poor diversification

The 3 months correlation between NETGEAR and Kulicke is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR 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 NETGEAR 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 NETGEAR 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 NETGEAR i.e., NETGEAR and Kulicke go up and down completely randomly.

Pair Corralation between NETGEAR and Kulicke

Given the investment horizon of 90 days NETGEAR is expected to generate 1.02 times more return on investment than Kulicke. However, NETGEAR is 1.02 times more volatile than Kulicke and Soffa. It trades about 0.3 of its potential returns per unit of risk. Kulicke and Soffa is currently generating about 0.02 per unit of risk. If you would invest  2,410  in NETGEAR on September 21, 2024 and sell it today you would earn a total of  390.00  from holding NETGEAR or generate 16.18% return on investment over 90 days.

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

NETGEAR  vs.  Kulicke and Soffa

NETGEAR

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with NETGEAR and Kulicke

The main advantage of trading using opposite NETGEAR and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR 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 NETGEAR 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.