Correlation Between KVH Industries and Wireless Telecom

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

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

Diversification Opportunities for KVH Industries and Wireless Telecom

0.4

Correlation Coefficient

KVH Industries  Wireless Telecom

Very weak diversification

The 3 months correlation between KVH and Wireless is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Wireless Telecom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wireless Telecom and KVH Industries 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 KVH Industries are associated (or correlated) with Wireless Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wireless Telecom has no effect on the direction of KVH Industries i.e., KVH Industries and Wireless Telecom go up and down completely randomly.

Pair Corralation between KVH Industries and Wireless Telecom

If you would invest  459.00  in KVH Industries on September 17, 2024 and sell it today you would earn a total of  107.00  from holding KVH Industries or generate 23.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

KVH Industries  vs.  Wireless Telecom Group

KVH Industries

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical indicators, KVH Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Wireless Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with KVH Industries and Wireless Telecom

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

The idea behind KVH Industries and Wireless Telecom Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.