Correlation Between TE Connectivity and Kopin

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

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

Diversification Opportunities for TE Connectivity and Kopin

0.22

Correlation Coefficient

TE Connectivity  Kopin

Modest diversification

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

Pair Corralation between TE Connectivity and Kopin

Considering the 90-day investment horizon TE Connectivity is expected to under-perform the Kopin. But the stock apears to be less risky and, when comparing its historical volatility, TE Connectivity is 4.49 times less risky than Kopin. The stock trades about -0.29 of its potential returns per unit of risk. The Kopin is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  108.00  in Kopin on September 25, 2024 and sell it today you would earn a total of  21.00  from holding Kopin or generate 19.44% return on investment over 90 days.

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

TE Connectivity  vs.  Kopin

TE Connectivity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TE Connectivity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, TE Connectivity is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Kopin

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kopin are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kopin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TE Connectivity and Kopin

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

The idea behind TE Connectivity and Kopin 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.