Correlation Between XCHG Limited and KVH Industries
Can any of the company-specific risk be diversified away by investing in both XCHG Limited and KVH Industries 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 XCHG Limited and KVH Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XCHG Limited American and KVH Industries, you can compare the effects of market volatilities on XCHG Limited and KVH Industries 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 XCHG Limited with a short position of KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of XCHG Limited and KVH Industries.
Diversification Opportunities for XCHG Limited and KVH Industries
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between XCHG and KVH is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding XCHG Limited American and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and XCHG Limited 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 XCHG Limited American are associated (or correlated) with KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of XCHG Limited i.e., XCHG Limited and KVH Industries go up and down completely randomly.
Pair Corralation between XCHG Limited and KVH Industries
Considering the 90-day investment horizon XCHG Limited American is expected to generate 55.05 times more return on investment than KVH Industries. However, XCHG Limited is 55.05 times more volatile than KVH Industries. It trades about 0.14 of its potential returns per unit of risk. KVH Industries is currently generating about 0.04 per unit of risk. If you would invest 0.00 in XCHG Limited American on September 3, 2024 and sell it today you would earn a total of 1,493 from holding XCHG Limited American or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 41.1% |
| Values | Daily Returns |
XCHG Limited American vs. KVH Industries
Performance |
| Timeline |
| XCHG Limited American |
| KVH Industries |
XCHG Limited and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XCHG Limited and KVH Industries
The main advantage of trading using opposite XCHG Limited and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XCHG Limited position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| XCHG Limited vs. KVH Industries | XCHG Limited vs. Fossil Group | XCHG Limited vs. Old Dominion Freight | XCHG Limited vs. Academy Sports Outdoors |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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