Correlation Between NYSE Composite and KonaTel
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and KonaTel 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 NYSE Composite and KonaTel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and KonaTel, you can compare the effects of market volatilities on NYSE Composite and KonaTel 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 NYSE Composite with a short position of KonaTel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and KonaTel.
Diversification Opportunities for NYSE Composite and KonaTel
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and KonaTel is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and KonaTel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KonaTel and NYSE Composite 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 NYSE Composite are associated (or correlated) with KonaTel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KonaTel has no effect on the direction of NYSE Composite i.e., NYSE Composite and KonaTel go up and down completely randomly.
Pair Corralation between NYSE Composite and KonaTel
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.13 times more return on investment than KonaTel. However, NYSE Composite is 7.91 times less risky than KonaTel. It trades about 0.08 of its potential returns per unit of risk. KonaTel is currently generating about -0.03 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. KonaTel
Performance |
| Timeline |
NYSE Composite and KonaTel Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
KonaTel
Pair trading matchups for KonaTel
Pair Trading with NYSE Composite and KonaTel
The main advantage of trading using opposite NYSE Composite and KonaTel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, KonaTel 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 KonaTel will offset losses from the drop in KonaTel's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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