Correlation Between Boston Beer and Kulicke

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

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

Diversification Opportunities for Boston Beer and Kulicke

0.66

Correlation Coefficient

Boston Beer  Kulicke

Poor diversification

The 3 months correlation between Boston and Kulicke is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer 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 Boston Beer 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 Boston Beer 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 Boston Beer i.e., Boston Beer and Kulicke go up and down completely randomly.

Pair Corralation between Boston Beer and Kulicke

Considering the 90-day investment horizon Boston Beer is expected to generate 1.01 times more return on investment than Kulicke. However, Boston Beer is 1.01 times more volatile than Kulicke and Soffa. It trades about 0.01 of its potential returns per unit of risk. Kulicke and Soffa is currently generating about 0.0 per unit of risk. If you would invest  31,548  in Boston Beer on October 5, 2024 and sell it today you would lose (1,422) from holding Boston Beer or give up 4.51% of portfolio value over 90 days.

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

Boston Beer  vs.  Kulicke and Soffa

Boston Beer

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kulicke and Soffa

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kulicke and Soffa are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Kulicke is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Boston Beer and Kulicke

The main advantage of trading using opposite Boston Beer and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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 Boston Beer 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.