Correlation Between NESNVX and KVH Industries

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

By analyzing existing cross correlation between NESNVX 4 24 SEP 48 and KVH Industries, you can compare the effects of market volatilities on NESNVX 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 NESNVX with a short position of KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and KVH Industries.

Diversification Opportunities for NESNVX and KVH Industries

-0.52

Correlation Coefficient

NESNVX  KVH Industries

Excellent diversification

The 3 months correlation between NESNVX and KVH is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 4 24 SEP 48 and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and NESNVX 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 NESNVX 4 24 SEP 48 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 NESNVX i.e., NESNVX and KVH Industries go up and down completely randomly.

Pair Corralation between NESNVX and KVH Industries

Assuming the 90 days trading horizon NESNVX 4 24 SEP 48 is expected to generate 0.91 times more return on investment than KVH Industries. However, NESNVX 4 24 SEP 48 is 1.09 times less risky than KVH Industries. It trades about 0.11 of its potential returns per unit of risk. KVH Industries is currently generating about -0.12 per unit of risk. If you would invest  8,391  in NESNVX 4 24 SEP 48 on October 9, 2024 and sell it today you would earn a total of  305.00  from holding NESNVX 4 24 SEP 48 or generate 3.63% return on investment over 90 days.

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

NESNVX 4 24 SEP 48  vs.  KVH Industries

NESNVX 4 24

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NESNVX 4 24 SEP 48 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 NESNVX and KVH Industries

The main advantage of trading using opposite NESNVX and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX 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 NESNVX 4 24 SEP 48 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.