Correlation Between Identiv and Key Tronic

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

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

Diversification Opportunities for Identiv and Key Tronic

0.6

Correlation Coefficient

Identiv  Key Tronic

Poor diversification

The 3 months correlation between Identiv and Key is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Key Tronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Tronic and Identiv 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 Identiv are associated (or correlated) with Key Tronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Tronic has no effect on the direction of Identiv i.e., Identiv and Key Tronic go up and down completely randomly.

Pair Corralation between Identiv and Key Tronic

Given the investment horizon of 90 days Identiv is expected to generate 0.82 times more return on investment than Key Tronic. However, Identiv is 1.22 times less risky than Key Tronic. It trades about -0.06 of its potential returns per unit of risk. Key Tronic is currently generating about -0.22 per unit of risk. If you would invest  373.00  in Identiv on December 28, 2024 and sell it today you would lose (44.00) from holding Identiv or give up 11.8% of portfolio value over 90 days.

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

Identiv  vs.  Key Tronic

Identiv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Identiv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Key Tronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Key Tronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Identiv and Key Tronic

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

The idea behind Identiv and Key Tronic 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.