Correlation Between Adval Tech and Kudelski

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

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

Diversification Opportunities for Adval Tech and Kudelski

0.49

Correlation Coefficient

Adval Tech  Kudelski

Very weak diversification

The 3 months correlation between Adval and Kudelski is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Adval Tech Holding and Kudelski in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kudelski and Adval Tech 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 Adval Tech Holding are associated (or correlated) with Kudelski. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kudelski has no effect on the direction of Adval Tech i.e., Adval Tech and Kudelski go up and down completely randomly.

Pair Corralation between Adval Tech and Kudelski

Assuming the 90 days trading horizon Adval Tech Holding is expected to under-perform the Kudelski. But the stock apears to be less risky and, when comparing its historical volatility, Adval Tech Holding is 1.32 times less risky than Kudelski. The stock trades about -0.05 of its potential returns per unit of risk. The Kudelski is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  126.00  in Kudelski on October 8, 2024 and sell it today you would lose (2.00) from holding Kudelski or give up 1.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.53%
Values	Daily Returns

Adval Tech Holding  vs.  Kudelski

Adval Tech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Adval Tech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kudelski

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kudelski has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental 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 Adval Tech and Kudelski

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

The idea behind Adval Tech Holding and Kudelski 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.