Correlation Between Credo Technology and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Credo Technology 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 Credo Technology and KVH Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credo Technology Group and KVH Industries, you can compare the effects of market volatilities on Credo Technology 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 Credo Technology with a short position of KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credo Technology and KVH Industries.
Diversification Opportunities for Credo Technology and KVH Industries
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Credo and KVH is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Credo Technology Group and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and Credo Technology 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 Credo Technology Group 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 Credo Technology i.e., Credo Technology and KVH Industries go up and down completely randomly.
Pair Corralation between Credo Technology and KVH Industries
Given the investment horizon of 90 days Credo Technology Group is expected to generate 1.61 times more return on investment than KVH Industries. However, Credo Technology is 1.61 times more volatile than KVH Industries. It trades about 0.08 of its potential returns per unit of risk. KVH Industries is currently generating about -0.03 per unit of risk. If you would invest 1,469 in Credo Technology Group on August 27, 2024 and sell it today you would earn a total of 3,115 from holding Credo Technology Group or generate 212.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credo Technology Group vs. KVH Industries
Performance |
| Timeline |
| Credo Technology |
| KVH Industries |
Credo Technology and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credo Technology and KVH Industries
The main advantage of trading using opposite Credo Technology and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credo Technology 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.| Credo Technology vs. Zebra Technologies | Credo Technology vs. Ubiquiti Networks | Credo Technology vs. Ciena Corp | Credo Technology vs. Clearfield |
| KVH Industries vs. Ichor Holdings | KVH Industries vs. Fabrinet | KVH Industries vs. Hello Group | KVH Industries vs. Ultra Clean Holdings |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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