Correlation Between Easy Software and Keysight Technologies

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

By analyzing existing cross correlation between Easy Software AG and Keysight Technologies, you can compare the effects of market volatilities on Easy Software and Keysight Technologies 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 Easy Software with a short position of Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and Keysight Technologies.

Diversification Opportunities for Easy Software and Keysight Technologies

0.22

Correlation Coefficient

Easy Software  Keysight Technologies

Modest diversification

The 3 months correlation between Easy and Keysight is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and Easy Software 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 Easy Software AG are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Easy Software i.e., Easy Software and Keysight Technologies go up and down completely randomly.

Pair Corralation between Easy Software and Keysight Technologies

Assuming the 90 days trading horizon Easy Software AG is expected to generate 1.4 times more return on investment than Keysight Technologies. However, Easy Software is 1.4 times more volatile than Keysight Technologies. It trades about 0.2 of its potential returns per unit of risk. Keysight Technologies is currently generating about 0.06 per unit of risk. If you would invest  1,470  in Easy Software AG on October 9, 2024 and sell it today you would earn a total of  330.00  from holding Easy Software AG or generate 22.45% return on investment over 90 days.

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

Easy Software AG  vs.  Keysight Technologies

Easy Software AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Software AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Easy Software displayed solid returns over the last few months and may actually be approaching a breakup point.

Keysight Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Keysight Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Easy Software and Keysight Technologies

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

The idea behind Easy Software AG and Keysight Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.