Correlation Between VeriSign and Kopin
Can any of the company-specific risk be diversified away by investing in both VeriSign and Kopin 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 VeriSign and Kopin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VeriSign and Kopin, you can compare the effects of market volatilities on VeriSign and Kopin 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 VeriSign with a short position of Kopin. Check out your portfolio center. Please also check ongoing floating volatility patterns of VeriSign and Kopin.
Diversification Opportunities for VeriSign and Kopin
Very good diversification
The 3 months correlation between VeriSign and Kopin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding VeriSign and Kopin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopin and VeriSign 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 VeriSign are associated (or correlated) with Kopin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopin has no effect on the direction of VeriSign i.e., VeriSign and Kopin go up and down completely randomly.
Pair Corralation between VeriSign and Kopin
Given the investment horizon of 90 days VeriSign is expected to generate 17.17 times less return on investment than Kopin. But when comparing it to its historical volatility, VeriSign is 4.59 times less risky than Kopin. It trades about 0.06 of its potential returns per unit of risk. Kopin is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 83.00 in Kopin on August 27, 2024 and sell it today you would earn a total of 25.00 from holding Kopin or generate 30.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VeriSign vs. Kopin
Performance |
| Timeline |
| VeriSign |
| Kopin |
VeriSign and Kopin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VeriSign and Kopin
The main advantage of trading using opposite VeriSign and Kopin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VeriSign position performs unexpectedly, Kopin 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 Kopin will offset losses from the drop in Kopin's long position.The idea behind VeriSign and Kopin 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.| Kopin vs. Universal Display | Kopin vs. Daktronics | Kopin vs. KULR Technology Group | Kopin vs. LightPath Technologies |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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