Correlation Between Altek Corp and Kinko Optical

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

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

Diversification Opportunities for Altek Corp and Kinko Optical

0.73

Correlation Coefficient

Altek Corp  Kinko Optical

Poor diversification

The 3 months correlation between Altek and Kinko is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Altek Corp and Kinko Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinko Optical and Altek 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 Altek Corp are associated (or correlated) with Kinko Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinko Optical has no effect on the direction of Altek Corp i.e., Altek Corp and Kinko Optical go up and down completely randomly.

Pair Corralation between Altek Corp and Kinko Optical

Assuming the 90 days trading horizon Altek Corp is expected to generate 1.16 times less return on investment than Kinko Optical. In addition to that, Altek Corp is 1.11 times more volatile than Kinko Optical Co. It trades about 0.05 of its total potential returns per unit of risk. Kinko Optical Co is currently generating about 0.07 per unit of volatility. If you would invest  2,860  in Kinko Optical Co on December 30, 2024 and sell it today you would earn a total of  235.00  from holding Kinko Optical Co or generate 8.22% return on investment over 90 days.

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

Altek Corp  vs.  Kinko Optical Co

Altek Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altek Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Altek Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kinko Optical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinko Optical Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kinko Optical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Altek Corp and Kinko Optical

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

The idea behind Altek Corp and Kinko Optical Co 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.