Correlation Between Deswell Industries and Knowles Cor
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and Knowles Cor 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 Deswell Industries and Knowles Cor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and Knowles Cor, you can compare the effects of market volatilities on Deswell Industries and Knowles Cor 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 Deswell Industries with a short position of Knowles Cor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and Knowles Cor.
Diversification Opportunities for Deswell Industries and Knowles Cor
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Deswell and Knowles is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor and Deswell Industries 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 Deswell Industries are associated (or correlated) with Knowles Cor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles Cor has no effect on the direction of Deswell Industries i.e., Deswell Industries and Knowles Cor go up and down completely randomly.
Pair Corralation between Deswell Industries and Knowles Cor
Given the investment horizon of 90 days Deswell Industries is expected to generate 1.62 times less return on investment than Knowles Cor. But when comparing it to its historical volatility, Deswell Industries is 1.11 times less risky than Knowles Cor. It trades about 0.11 of its potential returns per unit of risk. Knowles Cor is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,726 in Knowles Cor on September 3, 2024 and sell it today you would earn a total of 220.00 from holding Knowles Cor or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deswell Industries vs. Knowles Cor
Performance |
| Timeline |
| Deswell Industries |
| Knowles Cor |
Deswell Industries and Knowles Cor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and Knowles Cor
The main advantage of trading using opposite Deswell Industries and Knowles Cor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, Knowles Cor 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 Knowles Cor will offset losses from the drop in Knowles Cor's long position.| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. Micropac Industries | Deswell Industries vs. SigmaTron International |
| Knowles Cor vs. Mynaric AG ADR | Knowles Cor vs. Comtech Telecommunications Corp | Knowles Cor vs. Ituran Location and | Knowles Cor vs. Aviat Networks |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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