Correlation Between KWESST Micro and Intuitive Machines

Can any of the company-specific risk be diversified away by investing in both KWESST Micro and Intuitive Machines 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 Intuitive Machines 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 Intuitive Machines, you can compare the effects of market volatilities on KWESST Micro and Intuitive Machines 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 Intuitive Machines. Check out your portfolio center. Please also check ongoing floating volatility patterns of KWESST Micro and Intuitive Machines.

Diversification Opportunities for KWESST Micro and Intuitive Machines

-0.74

Correlation Coefficient

KWESST Micro  Intuitive Machines

Pay attention - limited upside

The 3 months correlation between KWESST and Intuitive is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines 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 Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of KWESST Micro i.e., KWESST Micro and Intuitive Machines go up and down completely randomly.

Pair Corralation between KWESST Micro and Intuitive Machines

Considering the 90-day investment horizon KWESST Micro Systems is expected to under-perform the Intuitive Machines. In addition to that, KWESST Micro is 1.51 times more volatile than Intuitive Machines. It trades about -0.12 of its total potential returns per unit of risk. Intuitive Machines is currently generating about -0.05 per unit of volatility. If you would invest  1,512  in Intuitive Machines on September 23, 2024 and sell it today you would lose (155.00) from holding Intuitive Machines or give up 10.25% of portfolio value over 90 days.

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

KWESST Micro Systems  vs.  Intuitive Machines

KWESST Micro Systems

Risk-Adjusted Performance

0 of 100

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Intuitive Machines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KWESST Micro and Intuitive Machines

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

The idea behind KWESST Micro Systems and Intuitive Machines 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.