Correlation Between NeoMagic and Key Tronic

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

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

Diversification Opportunities for NeoMagic and Key Tronic

0.0

Correlation Coefficient

NeoMagic  Key Tronic

Pay attention - limited upside

The 3 months correlation between NeoMagic and Key is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NeoMagic and Key Tronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Tronic and NeoMagic 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 NeoMagic are associated (or correlated) with Key Tronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Tronic has no effect on the direction of NeoMagic i.e., NeoMagic and Key Tronic go up and down completely randomly.

Pair Corralation between NeoMagic and Key Tronic

If you would invest  0.72  in NeoMagic on October 24, 2024 and sell it today you would earn a total of  0.00  from holding NeoMagic or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

NeoMagic  vs.  Key Tronic

NeoMagic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeoMagic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, NeoMagic is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Key Tronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Key Tronic 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 fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NeoMagic and Key Tronic

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

The idea behind NeoMagic and Key Tronic 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.