Correlation Between V Tac and Kenmec Mechanical

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

By analyzing existing cross correlation between V Tac Technology Co and Kenmec Mechanical Engineering, you can compare the effects of market volatilities on V Tac and Kenmec Mechanical 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 V Tac with a short position of Kenmec Mechanical. Check out your portfolio center. Please also check ongoing floating volatility patterns of V Tac and Kenmec Mechanical.

Diversification Opportunities for V Tac and Kenmec Mechanical

0.77

Correlation Coefficient

V Tac  Kenmec Mechanical

Poor diversification

The 3 months correlation between 6229 and Kenmec is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding V Tac Technology Co and Kenmec Mechanical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmec Mechanical and V Tac 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 V Tac Technology Co are associated (or correlated) with Kenmec Mechanical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenmec Mechanical has no effect on the direction of V Tac i.e., V Tac and Kenmec Mechanical go up and down completely randomly.

Pair Corralation between V Tac and Kenmec Mechanical

Assuming the 90 days trading horizon V Tac is expected to generate 3.25 times less return on investment than Kenmec Mechanical. But when comparing it to its historical volatility, V Tac Technology Co is 1.34 times less risky than Kenmec Mechanical. It trades about 0.04 of its potential returns per unit of risk. Kenmec Mechanical Engineering is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,499  in Kenmec Mechanical Engineering on September 18, 2024 and sell it today you would earn a total of  5,671  from holding Kenmec Mechanical Engineering or generate 226.93% return on investment over 90 days.

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

V Tac Technology Co  vs.  Kenmec Mechanical Engineering

V Tac Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Tac Technology Co 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.

Kenmec Mechanical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenmec Mechanical Engineering 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 V Tac and Kenmec Mechanical

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

The idea behind V Tac Technology Co and Kenmec Mechanical Engineering 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.