Correlation Between Sono Tek and MKS Instruments
Can any of the company-specific risk be diversified away by investing in both Sono Tek and MKS Instruments 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 Sono Tek and MKS Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sono Tek Corp and MKS Instruments, you can compare the effects of market volatilities on Sono Tek and MKS Instruments 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 Sono Tek with a short position of MKS Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sono Tek and MKS Instruments.
Diversification Opportunities for Sono Tek and MKS Instruments
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sono and MKS is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments and Sono Tek 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 Sono Tek Corp are associated (or correlated) with MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of Sono Tek i.e., Sono Tek and MKS Instruments go up and down completely randomly.
Pair Corralation between Sono Tek and MKS Instruments
Given the investment horizon of 90 days Sono Tek is expected to generate 4.08 times less return on investment than MKS Instruments. But when comparing it to its historical volatility, Sono Tek Corp is 1.77 times less risky than MKS Instruments. It trades about 0.09 of its potential returns per unit of risk. MKS Instruments is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 9,860 in MKS Instruments on August 24, 2024 and sell it today you would earn a total of 1,511 from holding MKS Instruments or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sono Tek Corp vs. MKS Instruments
Performance |
| Timeline |
| Sono Tek Corp |
| MKS Instruments |
Sono Tek and MKS Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sono Tek and MKS Instruments
The main advantage of trading using opposite Sono Tek and MKS Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sono Tek position performs unexpectedly, MKS Instruments 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 MKS Instruments will offset losses from the drop in MKS Instruments' long position.| Sono Tek vs. Novanta | Sono Tek vs. ESCO Technologies | Sono Tek vs. Vontier Corp | Sono Tek vs. Sensata Technologies Holding |
| MKS Instruments vs. Vontier Corp | MKS Instruments vs. Teledyne Technologies Incorporated | MKS Instruments vs. ESCO Technologies | MKS Instruments vs. Sensata Technologies Holding |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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