Correlation Between KVH Industries and Flex
Can any of the company-specific risk be diversified away by investing in both KVH Industries and Flex 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 KVH Industries and Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KVH Industries and Flex, you can compare the effects of market volatilities on KVH Industries and Flex 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 KVH Industries with a short position of Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and Flex.
Diversification Opportunities for KVH Industries and Flex
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KVH and Flex is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex and KVH 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 KVH Industries are associated (or correlated) with Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of KVH Industries i.e., KVH Industries and Flex go up and down completely randomly.
Pair Corralation between KVH Industries and Flex
Given the investment horizon of 90 days KVH Industries is expected to generate 0.75 times more return on investment than Flex. However, KVH Industries is 1.34 times less risky than Flex. It trades about 0.31 of its potential returns per unit of risk. Flex is currently generating about 0.21 per unit of risk. If you would invest 476.00 in KVH Industries on August 29, 2024 and sell it today you would earn a total of 71.00 from holding KVH Industries or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KVH Industries vs. Flex
Performance |
| Timeline |
| KVH Industries |
| Flex |
KVH Industries and Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KVH Industries and Flex
The main advantage of trading using opposite KVH Industries and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex's long position.| KVH Industries vs. NETGEAR | KVH Industries vs. Merck Company | KVH Industries vs. Pharvaris BV | KVH Industries vs. Brinker International |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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