Correlation Between Kornit Digital and Veltex

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

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

Diversification Opportunities for Kornit Digital and Veltex

-0.54

Correlation Coefficient

Kornit Digital  Veltex

Excellent diversification

The 3 months correlation between Kornit and Veltex is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kornit Digital and Veltex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veltex and Kornit Digital 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 Kornit Digital are associated (or correlated) with Veltex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veltex has no effect on the direction of Kornit Digital i.e., Kornit Digital and Veltex go up and down completely randomly.

Pair Corralation between Kornit Digital and Veltex

Given the investment horizon of 90 days Kornit Digital is expected to generate 2.78 times less return on investment than Veltex. But when comparing it to its historical volatility, Kornit Digital is 3.37 times less risky than Veltex. It trades about 0.03 of its potential returns per unit of risk. Veltex is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Veltex on October 5, 2024 and sell it today you would lose (31.30) from holding Veltex or give up 82.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.73%
Values	Daily Returns

Kornit Digital  vs.  Veltex

Kornit Digital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kornit Digital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kornit Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Veltex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veltex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kornit Digital and Veltex

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

The idea behind Kornit Digital and Veltex 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.