Correlation Between Kaman and Park Electrochemical

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

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

Diversification Opportunities for Kaman and Park Electrochemical

0.0

Correlation Coefficient

Kaman  Park Electrochemical

Pay attention - limited upside

The 3 months correlation between Kaman and Park is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kaman and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical and Kaman 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 Kaman are associated (or correlated) with Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Kaman i.e., Kaman and Park Electrochemical go up and down completely randomly.

Pair Corralation between Kaman and Park Electrochemical

If you would invest (100.00) in Kaman on December 27, 2024 and sell it today you would earn a total of  100.00  from holding Kaman or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Kaman  vs.  Park Electrochemical

Kaman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaman has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Kaman is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Park Electrochemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park Electrochemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Park Electrochemical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kaman and Park Electrochemical

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

The idea behind Kaman and Park Electrochemical 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.