Correlation Between Koss and Lixil Group

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

By analyzing existing cross correlation between Koss Corporation and Lixil Group Corp, you can compare the effects of market volatilities on Koss and Lixil Group 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 Lixil Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koss and Lixil Group.

Diversification Opportunities for Koss and Lixil Group

-0.47

Correlation Coefficient

Koss  Lixil Group

Very good diversification

The 3 months correlation between Koss and Lixil is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Koss Corp. and Lixil Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixil Group Corp 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 Lixil Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixil Group Corp has no effect on the direction of Koss i.e., Koss and Lixil Group go up and down completely randomly.

Pair Corralation between Koss and Lixil Group

Given the investment horizon of 90 days Koss Corporation is expected to generate 3.8 times more return on investment than Lixil Group. However, Koss is 3.8 times more volatile than Lixil Group Corp. It trades about 0.16 of its potential returns per unit of risk. Lixil Group Corp is currently generating about -0.31 per unit of risk. If you would invest  731.00  in Koss Corporation on September 24, 2024 and sell it today you would earn a total of  79.00  from holding Koss Corporation or generate 10.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Koss Corp.  vs.  Lixil Group Corp

Koss

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Koss Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Koss unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lixil Group Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lixil Group Corp 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Koss and Lixil Group

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

The idea behind Koss Corporation and Lixil Group Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.