Correlation Between Kopin and Flex

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

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

Diversification Opportunities for Kopin and Flex

0.72

Correlation Coefficient

Kopin  Flex

Poor diversification

The 3 months correlation between Kopin and Flex is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kopin and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex and Kopin 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 Kopin are associated (or correlated) with Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of Kopin i.e., Kopin and Flex go up and down completely randomly.

Pair Corralation between Kopin and Flex

Given the investment horizon of 90 days Kopin is expected to generate 3.24 times more return on investment than Flex. However, Kopin is 3.24 times more volatile than Flex. It trades about 0.21 of its potential returns per unit of risk. Flex is currently generating about -0.21 per unit of risk. If you would invest  108.00  in Kopin on September 25, 2024 and sell it today you would earn a total of  21.00  from holding Kopin or generate 19.44% return on investment over 90 days.

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

Kopin  vs.  Flex

Kopin

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kopin are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kopin displayed solid returns over the last few months and may actually be approaching a breakup point.

Flex

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Kopin and Flex

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

The idea behind Kopin and Flex 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.