UKRAINE – 2021/03/22: In this photo illustration, the stock market information of KLA Corporation … [+] seen displayed on a smartphone with the KLA Corporation logo in the background. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
KLA Tencor (NASDAQ: KLAC), a company that sells manufacturing tools and yield management systems for the semiconductor industry, has seen its stock decline by roughly -5.5% over the last week (five trading days), compared to the S&P 500 which was down by about -1% over the same period. Although there hasn’t been too much news specific to the company, semiconductor equipment stocks, in general, have seen a slight sell-off, with Applied Materials down by about 6% and LAM Research stock falling by about 5% over the last week. The declines likely come as TSMC, the largest semiconductor contract manufacturer, expects the automotive chip shortage to ease this quarter noting that it would increase the output of semiconductors that go into vehicles by almost 60% versus last year and by roughly 30% from pre-pandemic levels.
So will KLA Tencor stock continue to trend lower over the coming weeks and months, or are gains looking more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price data, returns for KLA Tencor stock average about 6% in the next month (21 trading days) period after experiencing a -5% drop over the last five trading days. The stock is also likely to outperform the S&P 500 over the next month, with an expected return that would be about 4% higher compared to the S&P 500.
But how would these numbers change if you are interested in holding KLAC stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test KLAC stock chances of a rise after a fall and vice-versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF KLAC stock moved by -5% over 5 trading days, THEN over the next 21 trading days, KLAC stock moves an average of 5.8%, with a 71.3% probability of a positive return over this period.
Also, given a -5% movement for the stock over five trading days, it has historically witnessed an excess return of 3.7% compared to the S&P500 over the next 21 trading days, with a 67.1% percent probability of a positive excess return.
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Some Fun Scenarios, FAQs & Making Sense of KLAC Stock Movements:
Question 1: Is the average return for KLAC stock higher after a drop?
Consider two situations,
Case 1: KLA Tencor stock drops by -5% or more in a week
Case 2: KLA Tencor stock rises by 5% or more in a week
Is the average return for KLA Tencor stock higher over the subsequent month after Case 1 or Case 2?
KLAC stock fares better after Case 1, with an average return of 5.8% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.4% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how KLA Tencor stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold KLA Tencor stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For KLAC stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for KLA Tencor after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although KLAC stock appears to be an exception to this general observation.
KLAC’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for KLA Tencor stock by changing the inputs in the charts above.