Correlation Between Keysight Technologies and ChemoMetec

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

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

Diversification Opportunities for Keysight Technologies and ChemoMetec

0.7

Correlation Coefficient

Keysight Technologies  ChemoMetec

Poor diversification

The 3 months correlation between Keysight and ChemoMetec is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Keysight Technologies and ChemoMetec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChemoMetec AS and Keysight Technologies 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 Keysight Technologies are associated (or correlated) with ChemoMetec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChemoMetec AS has no effect on the direction of Keysight Technologies i.e., Keysight Technologies and ChemoMetec go up and down completely randomly.

Pair Corralation between Keysight Technologies and ChemoMetec

Assuming the 90 days horizon Keysight Technologies is expected to generate 2.39 times less return on investment than ChemoMetec. But when comparing it to its historical volatility, Keysight Technologies is 2.53 times less risky than ChemoMetec. It trades about 0.1 of its potential returns per unit of risk. ChemoMetec AS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,620  in ChemoMetec AS on October 23, 2024 and sell it today you would earn a total of  1,460  from holding ChemoMetec AS or generate 25.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Keysight Technologies  vs.  ChemoMetec AS

Keysight Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Keysight Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

ChemoMetec AS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChemoMetec AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ChemoMetec reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keysight Technologies and ChemoMetec

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

The idea behind Keysight Technologies and ChemoMetec AS 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 CEOs Directory module to screen CEOs from public companies around the world.