Correlation Between Nano Dimension and Key Tronic

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

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

Diversification Opportunities for Nano Dimension and Key Tronic

0.38

Correlation Coefficient

Nano Dimension  Key Tronic

Weak diversification

The 3 months correlation between Nano and Key is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nano Dimension and Key Tronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Tronic and Nano Dimension 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 Nano Dimension are associated (or correlated) with Key Tronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Tronic has no effect on the direction of Nano Dimension i.e., Nano Dimension and Key Tronic go up and down completely randomly.

Pair Corralation between Nano Dimension and Key Tronic

Given the investment horizon of 90 days Nano Dimension is expected to generate 7.26 times less return on investment than Key Tronic. In addition to that, Nano Dimension is 1.24 times more volatile than Key Tronic. It trades about 0.02 of its total potential returns per unit of risk. Key Tronic is currently generating about 0.14 per unit of volatility. If you would invest  457.00  in Key Tronic on September 5, 2024 and sell it today you would earn a total of  98.00  from holding Key Tronic or generate 21.44% return on investment over 90 days.

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

Nano Dimension  vs.  Key Tronic

Nano Dimension

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Dimension are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Nano Dimension is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Key Tronic

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Key Tronic are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Key Tronic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nano Dimension and Key Tronic

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

The idea behind Nano Dimension and Key Tronic 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 Transaction History module to view history of all your transactions and understand their impact on performance.