Correlation Between PAVmed Series and KVH Industries

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

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

Diversification Opportunities for PAVmed Series and KVH Industries

-0.24

Correlation Coefficient

PAVmed Series  KVH Industries

Very good diversification

The 3 months correlation between PAVmed and KVH is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PAVmed Series Z and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and PAVmed Series 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 PAVmed Series Z 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 PAVmed Series i.e., PAVmed Series and KVH Industries go up and down completely randomly.

Pair Corralation between PAVmed Series and KVH Industries

Assuming the 90 days horizon PAVmed Series Z is expected to generate 9.42 times more return on investment than KVH Industries. However, PAVmed Series is 9.42 times more volatile than KVH Industries. It trades about -0.01 of its potential returns per unit of risk. KVH Industries is currently generating about -0.12 per unit of risk. If you would invest  1.50  in PAVmed Series Z on October 9, 2024 and sell it today you would lose (0.48) from holding PAVmed Series Z or give up 32.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.47%
Values	Daily Returns

PAVmed Series Z  vs.  KVH Industries

PAVmed Series Z

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PAVmed Series Z are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, PAVmed Series showed solid returns over the last few months and may actually be approaching a breakup point.

KVH Industries

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 8 (%) 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 PAVmed Series and KVH Industries

The main advantage of trading using opposite PAVmed Series and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAVmed Series 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 PAVmed Series Z 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.