Correlation Between Keyence and MKS Instruments

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

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

Diversification Opportunities for Keyence and MKS Instruments

-0.17

Correlation Coefficient

Keyence  MKS Instruments

Good diversification

The 3 months correlation between Keyence and MKS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Keyence and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments and Keyence 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 Keyence are associated (or correlated) with MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of Keyence i.e., Keyence and MKS Instruments go up and down completely randomly.

Pair Corralation between Keyence and MKS Instruments

Assuming the 90 days horizon Keyence is expected to under-perform the MKS Instruments. But the stock apears to be less risky and, when comparing its historical volatility, Keyence is 1.66 times less risky than MKS Instruments. The stock trades about -0.08 of its potential returns per unit of risk. The MKS Instruments is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,094  in MKS Instruments on September 27, 2024 and sell it today you would lose (170.00) from holding MKS Instruments or give up 1.68% of portfolio value over 90 days.

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

Keyence  vs.  MKS Instruments

Keyence

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keyence has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

MKS Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MKS Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MKS Instruments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Keyence and MKS Instruments

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

The idea behind Keyence and MKS Instruments 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.