Correlation Between CSP and Key Tronic
Can any of the company-specific risk be diversified away by investing in both CSP and Key Tronic 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 CSP and Key Tronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSP Inc and Key Tronic, you can compare the effects of market volatilities on CSP and Key Tronic 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 CSP with a short position of Key Tronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSP and Key Tronic.
Diversification Opportunities for CSP and Key Tronic
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CSP and Key is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CSP Inc and Key Tronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Tronic and CSP 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 CSP Inc are associated (or correlated) with Key Tronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Tronic has no effect on the direction of CSP i.e., CSP and Key Tronic go up and down completely randomly.
Pair Corralation between CSP and Key Tronic
Given the investment horizon of 90 days CSP Inc is expected to generate 2.63 times more return on investment than Key Tronic. However, CSP is 2.63 times more volatile than Key Tronic. It trades about 0.31 of its potential returns per unit of risk. Key Tronic is currently generating about -0.16 per unit of risk. If you would invest 1,271 in CSP Inc on August 27, 2024 and sell it today you would earn a total of 447.00 from holding CSP Inc or generate 35.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSP Inc vs. Key Tronic
Performance |
| Timeline |
| CSP Inc |
| Key Tronic |
CSP and Key Tronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSP and Key Tronic
The main advantage of trading using opposite CSP and Key Tronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSP position performs unexpectedly, Key Tronic 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 Key Tronic will offset losses from the drop in Key Tronic's long position.| CSP vs. The Hackett Group | CSP vs. Nayax | CSP vs. Formula Systems 1985 | CSP vs. Information Services Group |
| Key Tronic vs. AGM Group Holdings | Key Tronic vs. TransAct Technologies Incorporated | Key Tronic vs. AstroNova | Key Tronic vs. Quantum |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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