Correlation Between Key Tronic and Ageagle Aerial

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

By analyzing existing cross correlation between Key Tronic and Ageagle Aerial Systems, you can compare the effects of market volatilities on Key Tronic and Ageagle Aerial 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 Ageagle Aerial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Key Tronic and Ageagle Aerial.

Diversification Opportunities for Key Tronic and Ageagle Aerial

0.95

Correlation Coefficient

Key Tronic  Ageagle Aerial

Almost no diversification

The 3 months correlation between Key and Ageagle is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Key Tronic and Ageagle Aerial Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ageagle Aerial Systems 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 Ageagle Aerial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ageagle Aerial Systems has no effect on the direction of Key Tronic i.e., Key Tronic and Ageagle Aerial go up and down completely randomly.

Pair Corralation between Key Tronic and Ageagle Aerial

Given the investment horizon of 90 days Key Tronic is expected to generate 0.65 times more return on investment than Ageagle Aerial. However, Key Tronic is 1.53 times less risky than Ageagle Aerial. It trades about -0.22 of its potential returns per unit of risk. Ageagle Aerial Systems is currently generating about -0.33 per unit of risk. If you would invest  427.00  in Key Tronic on December 28, 2024 and sell it today you would lose (166.00) from holding Key Tronic or give up 38.88% of portfolio value over 90 days.

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

Key Tronic  vs.  Ageagle Aerial Systems

Key Tronic

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ageagle Aerial Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ageagle Aerial Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.

Pair Trading with Key Tronic and Ageagle Aerial

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

The idea behind Key Tronic and Ageagle Aerial Systems 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.