Correlation Between KULR Technology and Micropac Industries

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

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

Diversification Opportunities for KULR Technology and Micropac Industries

0.56

Correlation Coefficient

KULR Technology  Micropac Industries

Very weak diversification

The 3 months correlation between KULR and Micropac is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding KULR Technology Group and Micropac Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micropac Industries and KULR Technology 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 KULR Technology Group are associated (or correlated) with Micropac Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micropac Industries has no effect on the direction of KULR Technology i.e., KULR Technology and Micropac Industries go up and down completely randomly.

Pair Corralation between KULR Technology and Micropac Industries

Given the investment horizon of 90 days KULR Technology Group is expected to generate 3.75 times more return on investment than Micropac Industries. However, KULR Technology is 3.75 times more volatile than Micropac Industries. It trades about 0.25 of its potential returns per unit of risk. Micropac Industries is currently generating about 0.14 per unit of risk. If you would invest  24.00  in KULR Technology Group on September 5, 2024 and sell it today you would earn a total of  115.00  from holding KULR Technology Group or generate 479.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

KULR Technology Group  vs.  Micropac Industries

KULR Technology Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KULR Technology Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting essential indicators, KULR Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Micropac Industries

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Micropac Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Micropac Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KULR Technology and Micropac Industries

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

The idea behind KULR Technology Group and Micropac Industries 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.