Correlation Between A Tech and KTB Investment

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

By analyzing existing cross correlation between A Tech Solution Co and KTB Investment Securities, you can compare the effects of market volatilities on A Tech and KTB Investment 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 A Tech with a short position of KTB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of A Tech and KTB Investment.

Diversification Opportunities for A Tech and KTB Investment

0.44

Correlation Coefficient

A Tech  KTB Investment

Very weak diversification

The 3 months correlation between 071670 and KTB is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding A Tech Solution Co and KTB Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTB Investment Securities and A Tech 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 A Tech Solution Co are associated (or correlated) with KTB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTB Investment Securities has no effect on the direction of A Tech i.e., A Tech and KTB Investment go up and down completely randomly.

Pair Corralation between A Tech and KTB Investment

Assuming the 90 days trading horizon A Tech Solution Co is expected to under-perform the KTB Investment. But the stock apears to be less risky and, when comparing its historical volatility, A Tech Solution Co is 1.01 times less risky than KTB Investment. The stock trades about -0.03 of its potential returns per unit of risk. The KTB Investment Securities is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  399,523  in KTB Investment Securities on October 5, 2024 and sell it today you would lose (85,023) from holding KTB Investment Securities or give up 21.28% of portfolio value over 90 days.

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

A Tech Solution Co  vs.  KTB Investment Securities

A Tech Solution

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A Tech Solution Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

KTB Investment Securities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KTB Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with A Tech and KTB Investment

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

The idea behind A Tech Solution Co and KTB Investment Securities 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.