Correlation Between Klingon Aerospace and Waffer Technology
Can any of the company-specific risk be diversified away by investing in both Klingon Aerospace and Waffer Technology 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 Klingon Aerospace and Waffer Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klingon Aerospace and Waffer Technology Corp, you can compare the effects of market volatilities on Klingon Aerospace and Waffer Technology 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 Klingon Aerospace with a short position of Waffer Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klingon Aerospace and Waffer Technology.
Diversification Opportunities for Klingon Aerospace and Waffer Technology
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Klingon and Waffer is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Klingon Aerospace and Waffer Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waffer Technology Corp and Klingon Aerospace 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 Klingon Aerospace are associated (or correlated) with Waffer Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waffer Technology Corp has no effect on the direction of Klingon Aerospace i.e., Klingon Aerospace and Waffer Technology go up and down completely randomly.
Pair Corralation between Klingon Aerospace and Waffer Technology
Assuming the 90 days trading horizon Klingon Aerospace is expected to generate 0.75 times more return on investment than Waffer Technology. However, Klingon Aerospace is 1.33 times less risky than Waffer Technology. It trades about -0.27 of its potential returns per unit of risk. Waffer Technology Corp is currently generating about -0.25 per unit of risk. If you would invest 2,415 in Klingon Aerospace on November 4, 2024 and sell it today you would lose (150.00) from holding Klingon Aerospace or give up 6.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klingon Aerospace vs. Waffer Technology Corp
Performance |
| Timeline |
| Klingon Aerospace |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Waffer Technology Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Klingon Aerospace and Waffer Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klingon Aerospace and Waffer Technology
The main advantage of trading using opposite Klingon Aerospace and Waffer Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klingon Aerospace position performs unexpectedly, Waffer Technology 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 Waffer Technology will offset losses from the drop in Waffer Technology's long position.The idea behind Klingon Aerospace and Waffer Technology Corp 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.Check out your portfolio center.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |