Correlation Between Industrial and Keeson Technology

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

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

Diversification Opportunities for Industrial and Keeson Technology

0.78

Correlation Coefficient

Industrial  Keeson Technology

Poor diversification

The 3 months correlation between Industrial and Keeson is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Keeson Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeson Technology Corp and Industrial 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 Industrial and Commercial are associated (or correlated) with Keeson Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keeson Technology Corp has no effect on the direction of Industrial i.e., Industrial and Keeson Technology go up and down completely randomly.

Pair Corralation between Industrial and Keeson Technology

Assuming the 90 days trading horizon Industrial is expected to generate 1.45 times less return on investment than Keeson Technology. But when comparing it to its historical volatility, Industrial and Commercial is 3.54 times less risky than Keeson Technology. It trades about 0.41 of its potential returns per unit of risk. Keeson Technology Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  998.00  in Keeson Technology Corp on September 24, 2024 and sell it today you would earn a total of  137.00  from holding Keeson Technology Corp or generate 13.73% return on investment over 90 days.

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

Industrial and Commercial  vs.  Keeson Technology Corp

Industrial and Commercial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Keeson Technology Corp

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Keeson Technology Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Keeson Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industrial and Keeson Technology

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

The idea behind Industrial and Commercial and Keeson Technology 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.