Correlation Between Seadrill and Kulicke

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

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

Diversification Opportunities for Seadrill and Kulicke

0.33

Correlation Coefficient

Seadrill  Kulicke

Weak diversification

The 3 months correlation between Seadrill and Kulicke is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited 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 Seadrill 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 Seadrill Limited 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 Seadrill i.e., Seadrill and Kulicke go up and down completely randomly.

Pair Corralation between Seadrill and Kulicke

Given the investment horizon of 90 days Seadrill is expected to generate 1.35 times less return on investment than Kulicke. In addition to that, Seadrill is 1.05 times more volatile than Kulicke and Soffa. It trades about 0.01 of its total potential returns per unit of risk. Kulicke and Soffa is currently generating about 0.01 per unit of volatility. If you would invest  4,781  in Kulicke and Soffa on October 10, 2024 and sell it today you would earn a total of  17.00  from holding Kulicke and Soffa or generate 0.36% return on investment over 90 days.

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

Seadrill Limited  vs.  Kulicke and Soffa

Seadrill Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seadrill Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Seadrill is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Kulicke and Soffa

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kulicke and Soffa are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Kulicke may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Seadrill and Kulicke

The main advantage of trading using opposite Seadrill and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seadrill 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 Seadrill Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.