Correlation Between KVH Industries and Enlight Renewable

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

By analyzing existing cross correlation between KVH Industries and Enlight Renewable Energy, you can compare the effects of market volatilities on KVH Industries and Enlight Renewable 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 Enlight Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and Enlight Renewable.

Diversification Opportunities for KVH Industries and Enlight Renewable

0.29

Correlation Coefficient

KVH Industries  Enlight Renewable

Modest diversification

The 3 months correlation between KVH and Enlight is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy 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 Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of KVH Industries i.e., KVH Industries and Enlight Renewable go up and down completely randomly.

Pair Corralation between KVH Industries and Enlight Renewable

Given the investment horizon of 90 days KVH Industries is expected to generate 0.8 times more return on investment than Enlight Renewable. However, KVH Industries is 1.25 times less risky than Enlight Renewable. It trades about 0.17 of its potential returns per unit of risk. Enlight Renewable Energy is currently generating about 0.03 per unit of risk. If you would invest  466.00  in KVH Industries on September 5, 2024 and sell it today you would earn a total of  118.00  from holding KVH Industries or generate 25.32% return on investment over 90 days.

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

KVH Industries  vs.  Enlight Renewable Energy

KVH Industries

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, KVH Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Enlight Renewable Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Enlight Renewable is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KVH Industries and Enlight Renewable

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

The idea behind KVH Industries and Enlight Renewable Energy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.