Correlation Between KWESST Micro and Byrna Technologies

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

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

Diversification Opportunities for KWESST Micro and Byrna Technologies

-0.34

Correlation Coefficient

KWESST Micro  Byrna Technologies

Very good diversification

The 3 months correlation between KWESST and Byrna is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and Byrna Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byrna Technologies and KWESST Micro 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 KWESST Micro Systems are associated (or correlated) with Byrna Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byrna Technologies has no effect on the direction of KWESST Micro i.e., KWESST Micro and Byrna Technologies go up and down completely randomly.

Pair Corralation between KWESST Micro and Byrna Technologies

Assuming the 90 days horizon KWESST Micro Systems is expected to generate 29.0 times more return on investment than Byrna Technologies. However, KWESST Micro is 29.0 times more volatile than Byrna Technologies. It trades about 0.22 of its potential returns per unit of risk. Byrna Technologies is currently generating about 0.16 per unit of risk. If you would invest  2.00  in KWESST Micro Systems on August 31, 2024 and sell it today you would lose (0.79) from holding KWESST Micro Systems or give up 39.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.1%
Values	Daily Returns

KWESST Micro Systems  vs.  Byrna Technologies

KWESST Micro Systems

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KWESST Micro Systems are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, KWESST Micro showed solid returns over the last few months and may actually be approaching a breakup point.

Byrna Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Byrna Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Byrna Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KWESST Micro and Byrna Technologies

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

The idea behind KWESST Micro Systems and Byrna Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.