Correlation Between KYE Systems and Lingsen Precision

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

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

Diversification Opportunities for KYE Systems and Lingsen Precision

0.17

Correlation Coefficient

KYE Systems  Lingsen Precision

Average diversification

The 3 months correlation between KYE and Lingsen is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding KYE Systems Corp and Lingsen Precision Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingsen Precision and KYE Systems 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 KYE Systems Corp are associated (or correlated) with Lingsen Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lingsen Precision has no effect on the direction of KYE Systems i.e., KYE Systems and Lingsen Precision go up and down completely randomly.

Pair Corralation between KYE Systems and Lingsen Precision

Assuming the 90 days trading horizon KYE Systems Corp is expected to under-perform the Lingsen Precision. In addition to that, KYE Systems is 1.57 times more volatile than Lingsen Precision Industries. It trades about -0.13 of its total potential returns per unit of risk. Lingsen Precision Industries is currently generating about -0.16 per unit of volatility. If you would invest  1,885  in Lingsen Precision Industries on September 14, 2024 and sell it today you would lose (105.00) from holding Lingsen Precision Industries or give up 5.57% of portfolio value over 90 days.

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

KYE Systems Corp  vs.  Lingsen Precision Industries

KYE Systems Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KYE Systems Corp 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.

Lingsen Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lingsen Precision Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lingsen Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with KYE Systems and Lingsen Precision

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

The idea behind KYE Systems Corp and Lingsen Precision Industries 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.