Correlation Between KVH Industries and Boston Beer

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

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

Diversification Opportunities for KVH Industries and Boston Beer

-0.3

Correlation Coefficient

KVH Industries  Boston Beer

Very good diversification

The 3 months correlation between KVH and Boston is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of KVH Industries i.e., KVH Industries and Boston Beer go up and down completely randomly.

Pair Corralation between KVH Industries and Boston Beer

Given the investment horizon of 90 days KVH Industries is expected to generate 1.19 times more return on investment than Boston Beer. However, KVH Industries is 1.19 times more volatile than Boston Beer. It trades about -0.02 of its potential returns per unit of risk. Boston Beer is currently generating about -0.03 per unit of risk. If you would invest  986.00  in KVH Industries on October 27, 2024 and sell it today you would lose (374.00) from holding KVH Industries or give up 37.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KVH Industries  vs.  Boston Beer

KVH Industries

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical indicators, KVH Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Boston Beer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with KVH Industries and Boston Beer

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

The idea behind KVH Industries and Boston Beer 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.