Correlation Between KVH Industries and Baylin Technologies

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

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

Diversification Opportunities for KVH Industries and Baylin Technologies

-0.69

Correlation Coefficient

KVH Industries  Baylin Technologies

Excellent diversification

The 3 months correlation between KVH and Baylin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies and KVH Industries 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 KVH Industries are associated (or correlated) with Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of KVH Industries i.e., KVH Industries and Baylin Technologies go up and down completely randomly.

Pair Corralation between KVH Industries and Baylin Technologies

Given the investment horizon of 90 days KVH Industries is expected to generate 0.55 times more return on investment than Baylin Technologies. However, KVH Industries is 1.81 times less risky than Baylin Technologies. It trades about 0.16 of its potential returns per unit of risk. Baylin Technologies is currently generating about -0.18 per unit of risk. If you would invest  518.00  in KVH Industries on November 20, 2024 and sell it today you would earn a total of  88.00  from holding KVH Industries or generate 16.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

KVH Industries  vs.  Baylin Technologies

KVH Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, KVH Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Baylin Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baylin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with KVH Industries and Baylin Technologies

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

The idea behind KVH Industries and Baylin Technologies 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.