Correlation Between Quarterhill and KVH Industries

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

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

Diversification Opportunities for Quarterhill and KVH Industries

0.21

Correlation Coefficient

Quarterhill  KVH Industries

Modest diversification

The 3 months correlation between Quarterhill and KVH is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Quarterhill and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and Quarterhill 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 Quarterhill are associated (or correlated) with KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Quarterhill i.e., Quarterhill and KVH Industries go up and down completely randomly.

Pair Corralation between Quarterhill and KVH Industries

If you would invest  471.00  in KVH Industries on September 4, 2024 and sell it today you would earn a total of  113.00  from holding KVH Industries or generate 23.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Quarterhill  vs.  KVH Industries

Quarterhill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quarterhill has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Quarterhill is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KVH Industries

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, KVH Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quarterhill and KVH Industries

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

The idea behind Quarterhill and KVH Industries 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.