Correlation Between NISOURCE and Kulicke

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

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

Diversification Opportunities for NISOURCE and Kulicke

0.66

Correlation Coefficient

NISOURCE  Kulicke

Poor diversification

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

Pair Corralation between NISOURCE and Kulicke

Assuming the 90 days trading horizon NISOURCE FIN P is expected to generate 50.65 times more return on investment than Kulicke. However, NISOURCE is 50.65 times more volatile than Kulicke and Soffa. It trades about 0.1 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  10,338  in NISOURCE FIN P on September 26, 2024 and sell it today you would earn a total of  325.00  from holding NISOURCE FIN P or generate 3.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	46.98%
Values	Daily Returns

NISOURCE FIN P  vs.  Kulicke and Soffa

NISOURCE FIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE FIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NISOURCE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Kulicke and Soffa

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kulicke and Soffa are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Kulicke may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NISOURCE and Kulicke

The main advantage of trading using opposite NISOURCE and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISOURCE 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 NISOURCE FIN P 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.