Correlation Between KWESST MICRO and PKSHA TECHNOLOGY

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

By analyzing existing cross correlation between KWESST MICRO SYSINC and PKSHA TECHNOLOGY INC, you can compare the effects of market volatilities on KWESST MICRO and PKSHA 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 KWESST MICRO with a short position of PKSHA TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of KWESST MICRO and PKSHA TECHNOLOGY.

Diversification Opportunities for KWESST MICRO and PKSHA TECHNOLOGY

-0.11

Correlation Coefficient

KWESST MICRO  PKSHA TECHNOLOGY

Good diversification

The 3 months correlation between KWESST and PKSHA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding KWESST MICRO SYSINC and PKSHA TECHNOLOGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKSHA TECHNOLOGY INC and KWESST MICRO 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 KWESST MICRO SYSINC are associated (or correlated) with PKSHA TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKSHA TECHNOLOGY INC has no effect on the direction of KWESST MICRO i.e., KWESST MICRO and PKSHA TECHNOLOGY go up and down completely randomly.

Pair Corralation between KWESST MICRO and PKSHA TECHNOLOGY

Assuming the 90 days trading horizon KWESST MICRO SYSINC is expected to generate 33.22 times more return on investment than PKSHA TECHNOLOGY. However, KWESST MICRO is 33.22 times more volatile than PKSHA TECHNOLOGY INC. It trades about 0.1 of its potential returns per unit of risk. PKSHA TECHNOLOGY INC is currently generating about 0.14 per unit of risk. If you would invest  70.00  in KWESST MICRO SYSINC on September 19, 2024 and sell it today you would lose (14.00) from holding KWESST MICRO SYSINC or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

KWESST MICRO SYSINC  vs.  PKSHA TECHNOLOGY INC

KWESST MICRO SYSINC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KWESST MICRO SYSINC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KWESST MICRO reported solid returns over the last few months and may actually be approaching a breakup point.

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PKSHA TECHNOLOGY INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PKSHA TECHNOLOGY reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KWESST MICRO and PKSHA TECHNOLOGY

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

The idea behind KWESST MICRO SYSINC and PKSHA TECHNOLOGY INC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.