Correlation Between Flex and Kopin

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

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

Diversification Opportunities for Flex and Kopin

0.67

Correlation Coefficient

Flex  Kopin

Poor diversification

The 3 months correlation between Flex and Kopin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Flex and Kopin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopin and Flex 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 Flex 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 Flex i.e., Flex and Kopin go up and down completely randomly.

Pair Corralation between Flex and Kopin

Given the investment horizon of 90 days Flex is expected to generate 5.56 times less return on investment than Kopin. But when comparing it to its historical volatility, Flex is 2.3 times less risky than Kopin. It trades about 0.11 of its potential returns per unit of risk. Kopin is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  61.00  in Kopin on September 21, 2024 and sell it today you would earn a total of  72.00  from holding Kopin or generate 118.03% return on investment over 90 days.

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

Flex  vs.  Kopin

Flex

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flex are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Flex showed solid returns over the last few months and may actually be approaching a breakup point.

Kopin

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kopin are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Kopin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flex and Kopin

The main advantage of trading using opposite Flex and Kopin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex 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 Flex 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.