Correlation Between Koss and Root

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

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

Diversification Opportunities for Koss and Root

-0.13

Correlation Coefficient

Koss  Root

Good diversification

The 3 months correlation between Koss and Root is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Koss Corp. and Root Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Root Inc and Koss 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 Koss Corporation are associated (or correlated) with Root. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Root Inc has no effect on the direction of Koss i.e., Koss and Root go up and down completely randomly.

Pair Corralation between Koss and Root

Given the investment horizon of 90 days Koss is expected to generate 1.73 times less return on investment than Root. In addition to that, Koss is 1.32 times more volatile than Root Inc. It trades about 0.06 of its total potential returns per unit of risk. Root Inc is currently generating about 0.14 per unit of volatility. If you would invest  1,041  in Root Inc on September 12, 2024 and sell it today you would earn a total of  7,217  from holding Root Inc or generate 693.28% return on investment over 90 days.

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

Koss Corp.  vs.  Root Inc

Koss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koss Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Koss is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Root Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Root Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Root unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Koss and Root

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

The idea behind Koss Corporation and Root Inc 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 CEOs Directory module to screen CEOs from public companies around the world.