Correlation Between ServiceNow and Keen Vision

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

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

Diversification Opportunities for ServiceNow and Keen Vision

0.22

Correlation Coefficient

ServiceNow  Keen Vision

Modest diversification

The 3 months correlation between ServiceNow and Keen is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Keen Vision Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keen Vision Acquisition and ServiceNow 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 ServiceNow are associated (or correlated) with Keen Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keen Vision Acquisition has no effect on the direction of ServiceNow i.e., ServiceNow and Keen Vision go up and down completely randomly.

Pair Corralation between ServiceNow and Keen Vision

Considering the 90-day investment horizon ServiceNow is expected to generate 0.34 times more return on investment than Keen Vision. However, ServiceNow is 2.91 times less risky than Keen Vision. It trades about 0.22 of its potential returns per unit of risk. Keen Vision Acquisition is currently generating about 0.03 per unit of risk. If you would invest  83,586  in ServiceNow on September 3, 2024 and sell it today you would earn a total of  21,358  from holding ServiceNow or generate 25.55% return on investment over 90 days.

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

ServiceNow  vs.  Keen Vision Acquisition

ServiceNow

Risk-Adjusted Performance

17 of 100

Solid

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

Keen Vision Acquisition

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keen Vision Acquisition are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Keen Vision may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ServiceNow and Keen Vision

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

The idea behind ServiceNow and Keen Vision Acquisition 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.