Correlation Between KWESST Micro and Safe Pro

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

Diversification Opportunities for KWESST Micro and Safe Pro

-0.5

Correlation Coefficient

KWESST Micro  Safe Pro

Very good diversification

The 3 months correlation between KWESST and Safe is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and Safe Pro Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Pro Group 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 Safe Pro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Pro Group has no effect on the direction of KWESST Micro i.e., KWESST Micro and Safe Pro go up and down completely randomly.

Pair Corralation between KWESST Micro and Safe Pro

Considering the 90-day investment horizon KWESST Micro is expected to generate 1.18 times less return on investment than Safe Pro. But when comparing it to its historical volatility, KWESST Micro Systems is 1.22 times less risky than Safe Pro. It trades about 0.16 of its potential returns per unit of risk. Safe Pro Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  361.00  in Safe Pro Group on October 9, 2024 and sell it today you would earn a total of  92.00  from holding Safe Pro Group or generate 25.48% return on investment over 90 days.

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

KWESST Micro Systems  vs.  Safe Pro Group

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 rather weak basic indicators, KWESST Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Safe Pro Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Pro Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Safe Pro demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KWESST Micro and Safe Pro

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

The idea behind KWESST Micro Systems and Safe Pro Group 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.