Correlation Between Richardson Electronics and Kopin

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

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

Diversification Opportunities for Richardson Electronics and Kopin

0.52

Correlation Coefficient

Richardson Electronics  Kopin

Very weak diversification

The 3 months correlation between Richardson and Kopin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics and Kopin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopin and Richardson Electronics 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 Richardson Electronics are associated (or correlated) with Kopin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopin has no effect on the direction of Richardson Electronics i.e., Richardson Electronics and Kopin go up and down completely randomly.

Pair Corralation between Richardson Electronics and Kopin

Given the investment horizon of 90 days Richardson Electronics is expected to generate 1.92 times less return on investment than Kopin. But when comparing it to its historical volatility, Richardson Electronics is 3.33 times less risky than Kopin. It trades about 0.15 of its potential returns per unit of risk. Kopin is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Kopin on September 17, 2024 and sell it today you would earn a total of  20.00  from holding Kopin or generate 22.47% return on investment over 90 days.

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

Richardson Electronics  vs.  Kopin

Richardson Electronics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Richardson Electronics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Richardson Electronics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kopin

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kopin are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kopin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Richardson Electronics and Kopin

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

The idea behind Richardson Electronics and Kopin 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.