Correlation Between Inventec Corp and KS Terminals

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

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

Diversification Opportunities for Inventec Corp and KS Terminals

-0.63

Correlation Coefficient

Inventec Corp  KS Terminals

Excellent diversification

The 3 months correlation between Inventec and 3003 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Inventec Corp and KS Terminals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KS Terminals and Inventec Corp 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 Inventec Corp are associated (or correlated) with KS Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KS Terminals has no effect on the direction of Inventec Corp i.e., Inventec Corp and KS Terminals go up and down completely randomly.

Pair Corralation between Inventec Corp and KS Terminals

Assuming the 90 days trading horizon Inventec Corp is expected to generate 1.55 times more return on investment than KS Terminals. However, Inventec Corp is 1.55 times more volatile than KS Terminals. It trades about 0.06 of its potential returns per unit of risk. KS Terminals is currently generating about 0.02 per unit of risk. If you would invest  2,610  in Inventec Corp on September 24, 2024 and sell it today you would earn a total of  2,335  from holding Inventec Corp or generate 89.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Inventec Corp  vs.  KS Terminals

Inventec Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inventec Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Inventec Corp showed solid returns over the last few months and may actually be approaching a breakup point.

KS Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KS Terminals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Inventec Corp and KS Terminals

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

The idea behind Inventec Corp and KS Terminals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.