Correlation Between Koss and Wearable Devices

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

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

Diversification Opportunities for Koss and Wearable Devices

0.81

Correlation Coefficient

Koss  Wearable Devices

Very poor diversification

The 3 months correlation between Koss and Wearable is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Koss Corp. and Wearable Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wearable Devices 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 Wearable Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wearable Devices has no effect on the direction of Koss i.e., Koss and Wearable Devices go up and down completely randomly.

Pair Corralation between Koss and Wearable Devices

Given the investment horizon of 90 days Koss Corporation is expected to generate 0.46 times more return on investment than Wearable Devices. However, Koss Corporation is 2.17 times less risky than Wearable Devices. It trades about -0.09 of its potential returns per unit of risk. Wearable Devices is currently generating about -0.1 per unit of risk. If you would invest  702.00  in Koss Corporation on December 1, 2024 and sell it today you would lose (149.00) from holding Koss Corporation or give up 21.23% of portfolio value over 90 days.

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

Koss Corp.  vs.  Wearable Devices

Koss

Risk-Adjusted Performance

Very Weak

Over the last 90 days Koss Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Wearable Devices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wearable Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Koss and Wearable Devices

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

The idea behind Koss Corporation and Wearable Devices 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.