Correlation Between Key Tronic and Giga Tronics

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

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

Diversification Opportunities for Key Tronic and Giga Tronics

0.17

Correlation Coefficient

Key Tronic  Giga Tronics

Average diversification

The 3 months correlation between Key and Giga is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Key Tronic and Giga tronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giga tronics and Key Tronic 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 Key Tronic are associated (or correlated) with Giga Tronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giga tronics has no effect on the direction of Key Tronic i.e., Key Tronic and Giga Tronics go up and down completely randomly.

Pair Corralation between Key Tronic and Giga Tronics

Given the investment horizon of 90 days Key Tronic is expected to under-perform the Giga Tronics. But the stock apears to be less risky and, when comparing its historical volatility, Key Tronic is 6.62 times less risky than Giga Tronics. The stock trades about -0.03 of its potential returns per unit of risk. The Giga tronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  79.00  in Giga tronics on October 10, 2024 and sell it today you would lose (78.22) from holding Giga tronics or give up 99.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Key Tronic  vs.  Giga tronics

Key Tronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Key Tronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental 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.

Giga tronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giga tronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Key Tronic and Giga Tronics

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

The idea behind Key Tronic and Giga tronics 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.