Correlation Between Kinko Optical and RiTdisplay Corp

Can any of the company-specific risk be diversified away by investing in both Kinko Optical and RiTdisplay Corp 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 Kinko Optical and RiTdisplay Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinko Optical Co and RiTdisplay Corp, you can compare the effects of market volatilities on Kinko Optical and RiTdisplay Corp 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 Kinko Optical with a short position of RiTdisplay Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinko Optical and RiTdisplay Corp.

Diversification Opportunities for Kinko Optical and RiTdisplay Corp

-0.28

Correlation Coefficient

Kinko Optical  RiTdisplay Corp

Very good diversification

The 3 months correlation between Kinko and RiTdisplay is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kinko Optical Co and RiTdisplay Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiTdisplay Corp and Kinko Optical 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 Kinko Optical Co are associated (or correlated) with RiTdisplay Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiTdisplay Corp has no effect on the direction of Kinko Optical i.e., Kinko Optical and RiTdisplay Corp go up and down completely randomly.

Pair Corralation between Kinko Optical and RiTdisplay Corp

Assuming the 90 days trading horizon Kinko Optical Co is expected to under-perform the RiTdisplay Corp. But the stock apears to be less risky and, when comparing its historical volatility, Kinko Optical Co is 2.57 times less risky than RiTdisplay Corp. The stock trades about -0.07 of its potential returns per unit of risk. The RiTdisplay Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,225  in RiTdisplay Corp on September 3, 2024 and sell it today you would earn a total of  1,515  from holding RiTdisplay Corp or generate 35.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kinko Optical Co  vs.  RiTdisplay Corp

Kinko Optical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinko Optical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kinko Optical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

RiTdisplay Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RiTdisplay Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, RiTdisplay Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinko Optical and RiTdisplay Corp

The main advantage of trading using opposite Kinko Optical and RiTdisplay Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinko Optical position performs unexpectedly, RiTdisplay Corp 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 RiTdisplay Corp will offset losses from the drop in RiTdisplay Corp's long position.

The idea behind Kinko Optical Co and RiTdisplay Corp 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.