Correlation Between Kontrol Technologies and First National

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

By analyzing existing cross correlation between Kontrol Technologies Corp and First National Energy, you can compare the effects of market volatilities on Kontrol Technologies and First National 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 Kontrol Technologies with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontrol Technologies and First National.

Diversification Opportunities for Kontrol Technologies and First National

-0.2

Correlation Coefficient

Kontrol Technologies  First National

Good diversification

The 3 months correlation between Kontrol and First is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kontrol Technologies Corp and First National Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Energy and Kontrol Technologies 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 Kontrol Technologies Corp are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Energy has no effect on the direction of Kontrol Technologies i.e., Kontrol Technologies and First National go up and down completely randomly.

Pair Corralation between Kontrol Technologies and First National

Assuming the 90 days horizon Kontrol Technologies Corp is expected to generate 0.48 times more return on investment than First National. However, Kontrol Technologies Corp is 2.1 times less risky than First National. It trades about 0.04 of its potential returns per unit of risk. First National Energy is currently generating about 0.0 per unit of risk. If you would invest  13.00  in Kontrol Technologies Corp on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Kontrol Technologies Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Kontrol Technologies Corp  vs.  First National Energy

Kontrol Technologies Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kontrol Technologies Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Kontrol Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

First National Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First National Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, First National is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kontrol Technologies and First National

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

The idea behind Kontrol Technologies Corp and First National Energy 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.