Correlation Between KVH Industries and Fuyao Glass

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

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

Diversification Opportunities for KVH Industries and Fuyao Glass

0.6

Correlation Coefficient

KVH Industries  Fuyao Glass

Poor diversification

The 3 months correlation between KVH and Fuyao is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Fuyao Glass Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuyao Glass Industry 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 Fuyao Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuyao Glass Industry has no effect on the direction of KVH Industries i.e., KVH Industries and Fuyao Glass go up and down completely randomly.

Pair Corralation between KVH Industries and Fuyao Glass

Given the investment horizon of 90 days KVH Industries is expected to generate 0.55 times more return on investment than Fuyao Glass. However, KVH Industries is 1.82 times less risky than Fuyao Glass. It trades about 0.11 of its potential returns per unit of risk. Fuyao Glass Industry is currently generating about 0.06 per unit of risk. If you would invest  435.00  in KVH Industries on October 8, 2024 and sell it today you would earn a total of  130.00  from holding KVH Industries or generate 29.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.43%
Values	Daily Returns

KVH Industries  vs.  Fuyao Glass Industry

KVH Industries

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 8 (%) 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.

Fuyao Glass Industry

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fuyao Glass Industry are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Fuyao Glass showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KVH Industries and Fuyao Glass

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

The idea behind KVH Industries and Fuyao Glass Industry 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.