Correlation Between Insteel Industries and Keyence
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Keyence 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 Insteel Industries and Keyence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Keyence, you can compare the effects of market volatilities on Insteel Industries and Keyence 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 Insteel Industries with a short position of Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Keyence.
Diversification Opportunities for Insteel Industries and Keyence
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Insteel and Keyence is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence and Insteel 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 Insteel Industries are associated (or correlated) with Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of Insteel Industries i.e., Insteel Industries and Keyence go up and down completely randomly.
Pair Corralation between Insteel Industries and Keyence
Assuming the 90 days horizon Insteel Industries is expected to generate 1.15 times more return on investment than Keyence. However, Insteel Industries is 1.15 times more volatile than Keyence. It trades about 0.24 of its potential returns per unit of risk. Keyence is currently generating about 0.16 per unit of risk. If you would invest 2,520 in Insteel Industries on November 4, 2024 and sell it today you would earn a total of 260.00 from holding Insteel Industries or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Keyence
Performance |
| Timeline |
| Insteel Industries |
| Keyence |
Insteel Industries and Keyence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Keyence
The main advantage of trading using opposite Insteel Industries and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Keyence 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 Keyence will offset losses from the drop in Keyence's long position.| Insteel Industries vs. Television Broadcasts Limited | Insteel Industries vs. SAFEROADS HLDGS | Insteel Industries vs. SCIENCE IN SPORT | Insteel Industries vs. TITANIUM TRANSPORTGROUP |
| Keyence vs. Singapore Telecommunications Limited | Keyence vs. DEVRY EDUCATION GRP | Keyence vs. Cairo Communication SpA | Keyence vs. Grand Canyon Education |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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