Correlation Between Oculus VisionTech and Kingsmen Resources

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

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

Diversification Opportunities for Oculus VisionTech and Kingsmen Resources

0.77

Correlation Coefficient

Oculus VisionTech  Kingsmen Resources

Poor diversification

The 3 months correlation between Oculus and Kingsmen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Oculus VisionTech and Kingsmen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen Resources and Oculus VisionTech 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 Oculus VisionTech are associated (or correlated) with Kingsmen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen Resources has no effect on the direction of Oculus VisionTech i.e., Oculus VisionTech and Kingsmen Resources go up and down completely randomly.

Pair Corralation between Oculus VisionTech and Kingsmen Resources

Assuming the 90 days horizon Oculus VisionTech is expected to generate 2.32 times less return on investment than Kingsmen Resources. In addition to that, Oculus VisionTech is 1.23 times more volatile than Kingsmen Resources. It trades about 0.03 of its total potential returns per unit of risk. Kingsmen Resources is currently generating about 0.07 per unit of volatility. If you would invest  16.00  in Kingsmen Resources on September 24, 2024 and sell it today you would earn a total of  51.00  from holding Kingsmen Resources or generate 318.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Oculus VisionTech  vs.  Kingsmen Resources

Oculus VisionTech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oculus VisionTech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Oculus VisionTech showed solid returns over the last few months and may actually be approaching a breakup point.

Kingsmen Resources

Risk-Adjusted Performance

17 of 100

Solid

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

Pair Trading with Oculus VisionTech and Kingsmen Resources

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

The idea behind Oculus VisionTech and Kingsmen Resources 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.