Correlation Between Keyence and Spectris Plc
Can any of the company-specific risk be diversified away by investing in both Keyence and Spectris Plc 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 Keyence and Spectris Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyence and Spectris plc, you can compare the effects of market volatilities on Keyence and Spectris Plc 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 Keyence with a short position of Spectris Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyence and Spectris Plc.
Diversification Opportunities for Keyence and Spectris Plc
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Keyence and Spectris is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Keyence and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc and Keyence 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 Keyence are associated (or correlated) with Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Keyence i.e., Keyence and Spectris Plc go up and down completely randomly.
Pair Corralation between Keyence and Spectris Plc
Assuming the 90 days horizon Keyence is expected to generate 0.62 times more return on investment than Spectris Plc. However, Keyence is 1.62 times less risky than Spectris Plc. It trades about 0.0 of its potential returns per unit of risk. Spectris plc is currently generating about -0.01 per unit of risk. If you would invest 46,472 in Keyence on August 28, 2024 and sell it today you would lose (3,995) from holding Keyence or give up 8.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.4% |
| Values | Daily Returns |
Keyence vs. Spectris plc
Performance |
| Timeline |
| Keyence |
| Spectris plc |
Keyence and Spectris Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyence and Spectris Plc
The main advantage of trading using opposite Keyence and Spectris Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyence position performs unexpectedly, Spectris Plc 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 Spectris Plc will offset losses from the drop in Spectris Plc's long position.| Keyence vs. Garmin | Keyence vs. Keysight Technologies | Keyence vs. Fortive Corp | Keyence vs. Teledyne Technologies Incorporated |
| Spectris Plc vs. Track Group | Spectris Plc vs. Sono Tek Corp | Spectris Plc vs. Mind Technology | Spectris Plc vs. Electro Sensors |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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