Correlation Between KVH Industries and REPUBLIC

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Can any of the company-specific risk be diversified away by investing in both KVH Industries and REPUBLIC 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 REPUBLIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KVH Industries and REPUBLIC SVCS INC, you can compare the effects of market volatilities on KVH Industries and REPUBLIC 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 REPUBLIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and REPUBLIC.

Diversification Opportunities for KVH Industries and REPUBLIC

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between KVH and REPUBLIC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and REPUBLIC SVCS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REPUBLIC SVCS INC 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 REPUBLIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REPUBLIC SVCS INC has no effect on the direction of KVH Industries i.e., KVH Industries and REPUBLIC go up and down completely randomly.

Pair Corralation between KVH Industries and REPUBLIC

Given the investment horizon of 90 days KVH Industries is expected to generate 13.79 times more return on investment than REPUBLIC. However, KVH Industries is 13.79 times more volatile than REPUBLIC SVCS INC. It trades about 0.26 of its potential returns per unit of risk. REPUBLIC SVCS INC is currently generating about 0.09 per unit of risk. If you would invest  562.00  in KVH Industries on November 8, 2024 and sell it today you would earn a total of  47.00  from holding KVH Industries or generate 8.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

KVH Industries  vs.  REPUBLIC SVCS INC

 Performance 
       Timeline  
KVH Industries 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, KVH Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.
REPUBLIC SVCS INC 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in REPUBLIC SVCS INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, REPUBLIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KVH Industries and REPUBLIC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KVH Industries and REPUBLIC

The main advantage of trading using opposite KVH Industries and REPUBLIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries position performs unexpectedly, REPUBLIC 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 REPUBLIC will offset losses from the drop in REPUBLIC's long position.
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The idea behind KVH Industries and REPUBLIC SVCS INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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