Correlation Between KVH Industries and FormFactor
Can any of the company-specific risk be diversified away by investing in both KVH Industries and FormFactor 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 FormFactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KVH Industries and FormFactor, you can compare the effects of market volatilities on KVH Industries and FormFactor 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 FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and FormFactor.
Diversification Opportunities for KVH Industries and FormFactor
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KVH and FormFactor is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor 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 FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of KVH Industries i.e., KVH Industries and FormFactor go up and down completely randomly.
Pair Corralation between KVH Industries and FormFactor
Given the investment horizon of 90 days KVH Industries is expected to under-perform the FormFactor. But the stock apears to be less risky and, when comparing its historical volatility, KVH Industries is 1.06 times less risky than FormFactor. The stock trades about -0.05 of its potential returns per unit of risk. The FormFactor is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,126 in FormFactor on August 24, 2024 and sell it today you would earn a total of 1,007 from holding FormFactor or generate 32.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KVH Industries vs. FormFactor
Performance |
| Timeline |
| KVH Industries |
| FormFactor |
KVH Industries and FormFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KVH Industries and FormFactor
The main advantage of trading using opposite KVH Industries and FormFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries position performs unexpectedly, FormFactor 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 FormFactor will offset losses from the drop in FormFactor's long position.| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
| FormFactor vs. Eshallgo Class A | FormFactor vs. Amtech Systems | FormFactor vs. Gold Fields Ltd | FormFactor vs. Aegean Airlines SA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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