Correlation Between KYE Systems and Radiant Opto
Can any of the company-specific risk be diversified away by investing in both KYE Systems and Radiant Opto 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 KYE Systems and Radiant Opto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KYE Systems Corp and Radiant Opto Electronics Corp, you can compare the effects of market volatilities on KYE Systems and Radiant Opto 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 KYE Systems with a short position of Radiant Opto. Check out your portfolio center. Please also check ongoing floating volatility patterns of KYE Systems and Radiant Opto.
Diversification Opportunities for KYE Systems and Radiant Opto
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KYE and Radiant is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding KYE Systems Corp and Radiant Opto Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Opto Electro and KYE Systems 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 KYE Systems Corp are associated (or correlated) with Radiant Opto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Opto Electro has no effect on the direction of KYE Systems i.e., KYE Systems and Radiant Opto go up and down completely randomly.
Pair Corralation between KYE Systems and Radiant Opto
Assuming the 90 days trading horizon KYE Systems Corp is expected to under-perform the Radiant Opto. In addition to that, KYE Systems is 2.01 times more volatile than Radiant Opto Electronics Corp. It trades about -0.08 of its total potential returns per unit of risk. Radiant Opto Electronics Corp is currently generating about 0.26 per unit of volatility. If you would invest 19,150 in Radiant Opto Electronics Corp on November 4, 2024 and sell it today you would earn a total of 850.00 from holding Radiant Opto Electronics Corp or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KYE Systems Corp vs. Radiant Opto Electronics Corp
Performance |
| Timeline |
| KYE Systems Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Radiant Opto Electro |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KYE Systems and Radiant Opto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KYE Systems and Radiant Opto
The main advantage of trading using opposite KYE Systems and Radiant Opto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KYE Systems position performs unexpectedly, Radiant Opto 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 Radiant Opto will offset losses from the drop in Radiant Opto's long position.The idea behind KYE Systems Corp and Radiant Opto Electronics 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.
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