Correlation Between Mynaric AG and KVH Industries

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

By analyzing existing cross correlation between Mynaric AG ADR and KVH Industries, you can compare the effects of market volatilities on Mynaric AG and KVH Industries 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 Mynaric AG with a short position of KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mynaric AG and KVH Industries.

Diversification Opportunities for Mynaric AG and KVH Industries

-0.65

Correlation Coefficient

Mynaric AG  KVH Industries

Excellent diversification

The 3 months correlation between Mynaric and KVH is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mynaric AG ADR and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and Mynaric AG 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 Mynaric AG ADR are associated (or correlated) with KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Mynaric AG i.e., Mynaric AG and KVH Industries go up and down completely randomly.

Pair Corralation between Mynaric AG and KVH Industries

Given the investment horizon of 90 days Mynaric AG ADR is expected to under-perform the KVH Industries. In addition to that, Mynaric AG is 29.12 times more volatile than KVH Industries. It trades about -0.02 of its total potential returns per unit of risk. KVH Industries is currently generating about 0.06 per unit of volatility. If you would invest  598.00  in KVH Industries on November 19, 2024 and sell it today you would earn a total of  8.00  from holding KVH Industries or generate 1.34% return on investment over 90 days.

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

Mynaric AG ADR  vs.  KVH Industries

Mynaric AG ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mynaric AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

KVH Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 11 (%) 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.

Pair Trading with Mynaric AG and KVH Industries

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

The idea behind Mynaric AG ADR and KVH Industries 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 Global Correlations module to find global opportunities by holding instruments from different markets.