Correlation Between KSM Mutual and Photomyne

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

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

Diversification Opportunities for KSM Mutual and Photomyne

0.7

Correlation Coefficient

KSM Mutual  Photomyne

Poor diversification

The 3 months correlation between KSM and Photomyne is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding KSM Mutual Funds and Photomyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photomyne and KSM Mutual 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 KSM Mutual Funds are associated (or correlated) with Photomyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photomyne has no effect on the direction of KSM Mutual i.e., KSM Mutual and Photomyne go up and down completely randomly.

Pair Corralation between KSM Mutual and Photomyne

Assuming the 90 days trading horizon KSM Mutual is expected to generate 7.15 times less return on investment than Photomyne. But when comparing it to its historical volatility, KSM Mutual Funds is 6.84 times less risky than Photomyne. It trades about 0.32 of its potential returns per unit of risk. Photomyne is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  239,900  in Photomyne on September 12, 2024 and sell it today you would earn a total of  52,900  from holding Photomyne or generate 22.05% return on investment over 90 days.

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

KSM Mutual Funds  vs.  Photomyne

KSM Mutual Funds

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KSM Mutual Funds are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KSM Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Photomyne

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Photomyne are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Photomyne sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KSM Mutual and Photomyne

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

The idea behind KSM Mutual Funds and Photomyne 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.