Correlation Between Keysight Technologies and Kraken Robotics

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

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

Diversification Opportunities for Keysight Technologies and Kraken Robotics

0.62

Correlation Coefficient

Keysight Technologies  Kraken Robotics

Poor diversification

The 3 months correlation between Keysight and Kraken is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Keysight Technologies and Kraken Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Robotics and Keysight Technologies 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 Keysight Technologies are associated (or correlated) with Kraken Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Robotics has no effect on the direction of Keysight Technologies i.e., Keysight Technologies and Kraken Robotics go up and down completely randomly.

Pair Corralation between Keysight Technologies and Kraken Robotics

Given the investment horizon of 90 days Keysight Technologies is expected to generate 5.67 times less return on investment than Kraken Robotics. But when comparing it to its historical volatility, Keysight Technologies is 2.27 times less risky than Kraken Robotics. It trades about 0.05 of its potential returns per unit of risk. Kraken Robotics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Kraken Robotics on September 21, 2024 and sell it today you would earn a total of  46.00  from holding Kraken Robotics or generate 35.94% return on investment over 90 days.

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

Keysight Technologies  vs.  Kraken Robotics

Keysight Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Keysight Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kraken Robotics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kraken Robotics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Kraken Robotics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keysight Technologies and Kraken Robotics

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

The idea behind Keysight Technologies and Kraken Robotics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.