Correlation Between Quantum and Key Tronic

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

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

Diversification Opportunities for Quantum and Key Tronic

0.8

Correlation Coefficient

Quantum  Key Tronic

Very poor diversification

The 3 months correlation between Quantum and Key is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Quantum and Key Tronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Tronic and Quantum 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 Quantum 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 Quantum i.e., Quantum and Key Tronic go up and down completely randomly.

Pair Corralation between Quantum and Key Tronic

Given the investment horizon of 90 days Quantum is expected to under-perform the Key Tronic. In addition to that, Quantum is 3.93 times more volatile than Key Tronic. It trades about -0.11 of its total potential returns per unit of risk. Key Tronic is currently generating about -0.22 per unit of volatility. If you would invest  427.00  in Key Tronic on December 28, 2024 and sell it today you would lose (166.00) from holding Key Tronic or give up 38.88% of portfolio value over 90 days.

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

Quantum  vs.  Key Tronic

Quantum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Key Tronic

Risk-Adjusted Performance

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

Pair Trading with Quantum and Key Tronic

The main advantage of trading using opposite Quantum and Key Tronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantum 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 Quantum 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.