Correlation Between US Nuclear and Keyence

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

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

Diversification Opportunities for US Nuclear and Keyence

0.12

Correlation Coefficient

US Nuclear  Keyence

Average diversification

The 3 months correlation between UCLE and Keyence is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding US Nuclear Corp and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence and US Nuclear 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 US Nuclear Corp are associated (or correlated) with Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of US Nuclear i.e., US Nuclear and Keyence go up and down completely randomly.

Pair Corralation between US Nuclear and Keyence

Given the investment horizon of 90 days US Nuclear Corp is expected to generate 25.01 times more return on investment than Keyence. However, US Nuclear is 25.01 times more volatile than Keyence. It trades about 0.12 of its potential returns per unit of risk. Keyence is currently generating about -0.12 per unit of risk. If you would invest  9.00  in US Nuclear Corp on October 7, 2024 and sell it today you would lose (2.00) from holding US Nuclear Corp or give up 22.22% of portfolio value over 90 days.

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

US Nuclear Corp  vs.  Keyence

US Nuclear Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Nuclear Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, US Nuclear exhibited solid returns over the last few months and may actually be approaching a breakup point.

Keyence

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keyence has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with US Nuclear and Keyence

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

The idea behind US Nuclear Corp and Keyence 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.