Correlation Between Koss and Applied Blockchain

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

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

Diversification Opportunities for Koss and Applied Blockchain

0.26

Correlation Coefficient

Koss  Applied Blockchain

Modest diversification

The 3 months correlation between Koss and Applied is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Koss Corp. and Applied Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Blockchain and Koss 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 Koss Corporation are associated (or correlated) with Applied Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Blockchain has no effect on the direction of Koss i.e., Koss and Applied Blockchain go up and down completely randomly.

Pair Corralation between Koss and Applied Blockchain

Given the investment horizon of 90 days Koss is expected to generate 8.89 times less return on investment than Applied Blockchain. But when comparing it to its historical volatility, Koss Corporation is 1.92 times less risky than Applied Blockchain. It trades about 0.03 of its potential returns per unit of risk. Applied Blockchain is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  589.00  in Applied Blockchain on September 14, 2024 and sell it today you would earn a total of  301.00  from holding Applied Blockchain or generate 51.1% return on investment over 90 days.

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

Koss Corp.  vs.  Applied Blockchain

Koss

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koss Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Koss is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Applied Blockchain

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Koss and Applied Blockchain

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

The idea behind Koss Corporation and Applied Blockchain 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.