Correlation Between KonaTel and Power Solutions

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

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

Diversification Opportunities for KonaTel and Power Solutions

0.51

Correlation Coefficient

KonaTel  Power Solutions

Very weak diversification

The 3 months correlation between KonaTel and Power is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding KonaTel and Power Solutions International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Solutions Inte and KonaTel 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 KonaTel are associated (or correlated) with Power Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Solutions Inte has no effect on the direction of KonaTel i.e., KonaTel and Power Solutions go up and down completely randomly.

Pair Corralation between KonaTel and Power Solutions

If you would invest  315.00  in Power Solutions International on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Power Solutions International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

KonaTel  vs.  Power Solutions International

KonaTel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KonaTel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Power Solutions Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Solutions International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Power Solutions is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KonaTel and Power Solutions

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

The idea behind KonaTel and Power Solutions International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.