Correlation Between Deswell Industries and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Deswell Industries 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 Deswell Industries and KVH Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and KVH Industries, you can compare the effects of market volatilities on Deswell Industries 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 Deswell Industries with a short position of KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and KVH Industries.
Diversification Opportunities for Deswell Industries and KVH Industries
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deswell and KVH is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 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 Deswell Industries i.e., Deswell Industries and KVH Industries go up and down completely randomly.
Pair Corralation between Deswell Industries and KVH Industries
Given the investment horizon of 90 days Deswell Industries is expected to under-perform the KVH Industries. But the stock apears to be less risky and, when comparing its historical volatility, Deswell Industries is 1.12 times less risky than KVH Industries. The stock trades about -0.02 of its potential returns per unit of risk. The KVH Industries is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 528.00 in KVH Industries on October 20, 2024 and sell it today you would earn a total of 65.00 from holding KVH Industries or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deswell Industries vs. KVH Industries
Performance |
| Timeline |
| Deswell Industries |
| KVH Industries |
Deswell Industries and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and KVH Industries
The main advantage of trading using opposite Deswell Industries and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries 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.| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. SigmaTron International | Deswell Industries vs. Daktronics |
| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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