Correlation Between Mitake Information and Kingstate Electronics

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

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

Diversification Opportunities for Mitake Information and Kingstate Electronics

-0.85

Correlation Coefficient

Mitake Information  Kingstate Electronics

Pay attention - limited upside

The 3 months correlation between Mitake and Kingstate is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mitake Information and Kingstate Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstate Electronics and Mitake Information 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 Mitake Information are associated (or correlated) with Kingstate Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstate Electronics has no effect on the direction of Mitake Information i.e., Mitake Information and Kingstate Electronics go up and down completely randomly.

Pair Corralation between Mitake Information and Kingstate Electronics

Assuming the 90 days trading horizon Mitake Information is expected to generate 1.6 times less return on investment than Kingstate Electronics. But when comparing it to its historical volatility, Mitake Information is 1.89 times less risky than Kingstate Electronics. It trades about 0.06 of its potential returns per unit of risk. Kingstate Electronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,930  in Kingstate Electronics on September 23, 2024 and sell it today you would earn a total of  1,235  from holding Kingstate Electronics or generate 42.15% return on investment over 90 days.

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

Mitake Information  vs.  Kingstate Electronics

Mitake Information

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitake Information are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mitake Information is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kingstate Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingstate Electronics 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Mitake Information and Kingstate Electronics

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

The idea behind Mitake Information and Kingstate Electronics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.