Correlation Between Ichia Technologies and K Laser

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

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

Diversification Opportunities for Ichia Technologies and K Laser

0.81

Correlation Coefficient

Ichia Technologies  K Laser

Very poor diversification

The 3 months correlation between Ichia and 2461 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ichia Technologies and K Laser Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Laser Technology and Ichia 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 Ichia Technologies are associated (or correlated) with K Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Laser Technology has no effect on the direction of Ichia Technologies i.e., Ichia Technologies and K Laser go up and down completely randomly.

Pair Corralation between Ichia Technologies and K Laser

Assuming the 90 days trading horizon Ichia Technologies is expected to under-perform the K Laser. In addition to that, Ichia Technologies is 1.21 times more volatile than K Laser Technology. It trades about -0.19 of its total potential returns per unit of risk. K Laser Technology is currently generating about -0.13 per unit of volatility. If you would invest  2,075  in K Laser Technology on October 1, 2024 and sell it today you would lose (55.00) from holding K Laser Technology or give up 2.65% of portfolio value over 90 days.

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

Ichia Technologies  vs.  K Laser Technology

Ichia Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ichia Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

K Laser Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K Laser Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ichia Technologies and K Laser

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

The idea behind Ichia Technologies and K Laser 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.