Correlation Between Zinwell and KYE Systems

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

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

Diversification Opportunities for Zinwell and KYE Systems

0.44

Correlation Coefficient

Zinwell  KYE Systems

Very weak diversification

The 3 months correlation between Zinwell and KYE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Zinwell and KYE Systems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYE Systems Corp and Zinwell 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 Zinwell are associated (or correlated) with KYE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYE Systems Corp has no effect on the direction of Zinwell i.e., Zinwell and KYE Systems go up and down completely randomly.

Pair Corralation between Zinwell and KYE Systems

Assuming the 90 days trading horizon Zinwell is expected to under-perform the KYE Systems. But the stock apears to be less risky and, when comparing its historical volatility, Zinwell is 2.62 times less risky than KYE Systems. The stock trades about -0.37 of its potential returns per unit of risk. The KYE Systems Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,165  in KYE Systems Corp on October 6, 2024 and sell it today you would earn a total of  350.00  from holding KYE Systems Corp or generate 8.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Zinwell  vs.  KYE Systems Corp

Zinwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinwell 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.

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 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 Zinwell and KYE Systems

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

The idea behind Zinwell and KYE Systems Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.