Correlation Between Amotiv and Kits Eyecare

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

By analyzing existing cross correlation between Amotiv Limited and Kits Eyecare, you can compare the effects of market volatilities on Amotiv and Kits Eyecare 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 Amotiv with a short position of Kits Eyecare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amotiv and Kits Eyecare.

Diversification Opportunities for Amotiv and Kits Eyecare

0.73

Correlation Coefficient

Amotiv  Kits Eyecare

Poor diversification

The 3 months correlation between Amotiv and Kits is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Amotiv Limited and Kits Eyecare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kits Eyecare and Amotiv 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 Amotiv Limited are associated (or correlated) with Kits Eyecare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kits Eyecare has no effect on the direction of Amotiv i.e., Amotiv and Kits Eyecare go up and down completely randomly.

Pair Corralation between Amotiv and Kits Eyecare

Assuming the 90 days trading horizon Amotiv is expected to generate 26.06 times less return on investment than Kits Eyecare. But when comparing it to its historical volatility, Amotiv Limited is 1.92 times less risky than Kits Eyecare. It trades about 0.01 of its potential returns per unit of risk. Kits Eyecare is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  266.00  in Kits Eyecare on September 23, 2024 and sell it today you would earn a total of  585.00  from holding Kits Eyecare or generate 219.92% return on investment over 90 days.

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

Amotiv Limited  vs.  Kits Eyecare

Amotiv Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amotiv Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Kits Eyecare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kits Eyecare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Kits Eyecare is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Amotiv and Kits Eyecare

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

The idea behind Amotiv Limited and Kits Eyecare 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.