Correlation Between Key Tronic and Red Cat
Can any of the company-specific risk be diversified away by investing in both Key Tronic and Red Cat 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 Key Tronic and Red Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Key Tronic and Red Cat Holdings, you can compare the effects of market volatilities on Key Tronic and Red Cat 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 Key Tronic with a short position of Red Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Key Tronic and Red Cat.
Diversification Opportunities for Key Tronic and Red Cat
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Key and Red is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Key Tronic and Red Cat Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Cat Holdings and Key Tronic 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 Key Tronic are associated (or correlated) with Red Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Cat Holdings has no effect on the direction of Key Tronic i.e., Key Tronic and Red Cat go up and down completely randomly.
Pair Corralation between Key Tronic and Red Cat
Given the investment horizon of 90 days Key Tronic is expected to generate 20.06 times less return on investment than Red Cat. But when comparing it to its historical volatility, Key Tronic is 2.91 times less risky than Red Cat. It trades about 0.02 of its potential returns per unit of risk. Red Cat Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Red Cat Holdings on August 27, 2024 and sell it today you would earn a total of 802.00 from holding Red Cat Holdings or generate 844.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Key Tronic vs. Red Cat Holdings
Performance |
| Timeline |
| Key Tronic |
| Red Cat Holdings |
Key Tronic and Red Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Key Tronic and Red Cat
The main advantage of trading using opposite Key Tronic and Red Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Key Tronic position performs unexpectedly, Red Cat 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 Red Cat will offset losses from the drop in Red Cat's long position.| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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