Correlation Between Keyence and Quanergy Systems

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

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

Diversification Opportunities for Keyence and Quanergy Systems

0.48

Correlation Coefficient

Keyence  Quanergy Systems

Very weak diversification

The 3 months correlation between Keyence and Quanergy is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Keyence and Quanergy Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanergy Systems and Keyence 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 Keyence are associated (or correlated) with Quanergy Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanergy Systems has no effect on the direction of Keyence i.e., Keyence and Quanergy Systems go up and down completely randomly.

Pair Corralation between Keyence and Quanergy Systems

Assuming the 90 days horizon Keyence is expected to generate 0.08 times more return on investment than Quanergy Systems. However, Keyence is 12.3 times less risky than Quanergy Systems. It trades about 0.01 of its potential returns per unit of risk. Quanergy Systems is currently generating about -0.08 per unit of risk. If you would invest  40,426  in Keyence on August 31, 2024 and sell it today you would earn a total of  1,374  from holding Keyence or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	8.28%
Values	Daily Returns

Keyence  vs.  Quanergy Systems

Keyence

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keyence has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Quanergy Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quanergy Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Quanergy Systems is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Keyence and Quanergy Systems

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

The idea behind Keyence and Quanergy Systems 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.