Correlation Between KWESST Micro and Loar Holdings

Can any of the company-specific risk be diversified away by investing in both KWESST Micro and Loar Holdings 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 KWESST Micro and Loar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KWESST Micro Systems and Loar Holdings, you can compare the effects of market volatilities on KWESST Micro and Loar Holdings 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 KWESST Micro with a short position of Loar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KWESST Micro and Loar Holdings.

Diversification Opportunities for KWESST Micro and Loar Holdings

0.53

Correlation Coefficient

KWESST Micro  Loar Holdings

Very weak diversification

The 3 months correlation between KWESST and Loar is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and Loar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loar Holdings and KWESST Micro 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 KWESST Micro Systems are associated (or correlated) with Loar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loar Holdings has no effect on the direction of KWESST Micro i.e., KWESST Micro and Loar Holdings go up and down completely randomly.

Pair Corralation between KWESST Micro and Loar Holdings

Considering the 90-day investment horizon KWESST Micro Systems is expected to under-perform the Loar Holdings. In addition to that, KWESST Micro is 4.51 times more volatile than Loar Holdings. It trades about -0.03 of its total potential returns per unit of risk. Loar Holdings is currently generating about -0.07 per unit of volatility. If you would invest  7,536  in Loar Holdings on December 24, 2024 and sell it today you would lose (834.00) from holding Loar Holdings or give up 11.07% of portfolio value over 90 days.

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

KWESST Micro Systems  vs.  Loar Holdings

KWESST Micro Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days KWESST Micro Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Loar Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with KWESST Micro and Loar Holdings

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

The idea behind KWESST Micro Systems and Loar Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.