Correlation Between Photomyne and KSM Mutual

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

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

Diversification Opportunities for Photomyne and KSM Mutual

0.87

Correlation Coefficient

Photomyne  KSM Mutual

Very poor diversification

The 3 months correlation between Photomyne and KSM is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Photomyne and KSM Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSM Mutual Funds and Photomyne 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 Photomyne are associated (or correlated) with KSM Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSM Mutual Funds has no effect on the direction of Photomyne i.e., Photomyne and KSM Mutual go up and down completely randomly.

Pair Corralation between Photomyne and KSM Mutual

Assuming the 90 days trading horizon Photomyne is expected to generate 0.71 times more return on investment than KSM Mutual. However, Photomyne is 1.42 times less risky than KSM Mutual. It trades about 0.35 of its potential returns per unit of risk. KSM Mutual Funds is currently generating about 0.17 per unit of risk. If you would invest  242,200  in Photomyne on September 15, 2024 and sell it today you would earn a total of  59,200  from holding Photomyne or generate 24.44% return on investment over 90 days.

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

Photomyne  vs.  KSM Mutual Funds

Photomyne

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Photomyne are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Photomyne sustained solid returns over the last few months and may actually be approaching a breakup point.

KSM Mutual Funds

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KSM Mutual Funds are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, KSM Mutual sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Photomyne and KSM Mutual

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

The idea behind Photomyne and KSM Mutual Funds 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.