Correlation Between K Laser and Infortrend Technology

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

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

Diversification Opportunities for K Laser and Infortrend Technology

0.85

Correlation Coefficient

K Laser  Infortrend Technology

Very poor diversification

The 3 months correlation between 2461 and Infortrend is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding K Laser Technology and Infortrend Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infortrend Technology and K Laser 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 K Laser Technology are associated (or correlated) with Infortrend Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infortrend Technology has no effect on the direction of K Laser i.e., K Laser and Infortrend Technology go up and down completely randomly.

Pair Corralation between K Laser and Infortrend Technology

Assuming the 90 days trading horizon K Laser Technology is expected to under-perform the Infortrend Technology. But the stock apears to be less risky and, when comparing its historical volatility, K Laser Technology is 2.07 times less risky than Infortrend Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Infortrend Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,050  in Infortrend Technology on October 24, 2024 and sell it today you would earn a total of  1,080  from holding Infortrend Technology or generate 52.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.59%
Values	Daily Returns

K Laser Technology  vs.  Infortrend Technology

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Infortrend Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infortrend Technology 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with K Laser and Infortrend Technology

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

The idea behind K Laser Technology and Infortrend 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 CEOs Directory module to screen CEOs from public companies around the world.