Correlation Between Westone Information and Kontour Medical

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

By analyzing existing cross correlation between Westone Information Industry and Kontour Medical Technology, you can compare the effects of market volatilities on Westone Information and Kontour Medical 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 Westone Information with a short position of Kontour Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westone Information and Kontour Medical.

Diversification Opportunities for Westone Information and Kontour Medical

0.72

Correlation Coefficient

Westone Information  Kontour Medical

Poor diversification

The 3 months correlation between Westone and Kontour is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Westone Information Industry and Kontour Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontour Medical Tech and Westone Information 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 Westone Information Industry are associated (or correlated) with Kontour Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontour Medical Tech has no effect on the direction of Westone Information i.e., Westone Information and Kontour Medical go up and down completely randomly.

Pair Corralation between Westone Information and Kontour Medical

Assuming the 90 days trading horizon Westone Information Industry is expected to under-perform the Kontour Medical. But the stock apears to be less risky and, when comparing its historical volatility, Westone Information Industry is 1.11 times less risky than Kontour Medical. The stock trades about -0.03 of its potential returns per unit of risk. The Kontour Medical Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,544  in Kontour Medical Technology on September 27, 2024 and sell it today you would lose (739.00) from holding Kontour Medical Technology or give up 20.85% of portfolio value over 90 days.

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

Westone Information Industry  vs.  Kontour Medical Technology

Westone Information

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Westone Information Industry are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Westone Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Kontour Medical Tech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kontour Medical Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kontour Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Westone Information and Kontour Medical

The main advantage of trading using opposite Westone Information and Kontour Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westone Information position performs unexpectedly, Kontour Medical 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 Kontour Medical will offset losses from the drop in Kontour Medical's long position.

The idea behind Westone Information Industry and Kontour Medical Technology 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.