Correlation Between Kudelski and Adval Tech

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

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

Diversification Opportunities for Kudelski and Adval Tech

0.49

Correlation Coefficient

Kudelski  Adval Tech

Very weak diversification

The 3 months correlation between Kudelski and Adval is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kudelski and Adval Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adval Tech Holding and Kudelski 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 Kudelski are associated (or correlated) with Adval Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adval Tech Holding has no effect on the direction of Kudelski i.e., Kudelski and Adval Tech go up and down completely randomly.

Pair Corralation between Kudelski and Adval Tech

Assuming the 90 days trading horizon Kudelski is expected to under-perform the Adval Tech. In addition to that, Kudelski is 1.14 times more volatile than Adval Tech Holding. It trades about -0.08 of its total potential returns per unit of risk. Adval Tech Holding is currently generating about 0.06 per unit of volatility. If you would invest  7,550  in Adval Tech Holding on October 8, 2024 and sell it today you would earn a total of  350.00  from holding Adval Tech Holding or generate 4.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.78%
Values	Daily Returns

Kudelski  vs.  Adval Tech Holding

Kudelski

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kudelski has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Adval Tech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Adval Tech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Kudelski and Adval Tech

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

The idea behind Kudelski and Adval Tech Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.