Correlation Between KVH Industries and TransAct Technologies

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

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

Diversification Opportunities for KVH Industries and TransAct Technologies

-0.68

Correlation Coefficient

KVH Industries  TransAct Technologies

Excellent diversification

The 3 months correlation between KVH and TransAct is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and TransAct Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAct Technologies and KVH Industries 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 KVH Industries are associated (or correlated) with TransAct Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAct Technologies has no effect on the direction of KVH Industries i.e., KVH Industries and TransAct Technologies go up and down completely randomly.

Pair Corralation between KVH Industries and TransAct Technologies

Given the investment horizon of 90 days KVH Industries is expected to generate 0.31 times more return on investment than TransAct Technologies. However, KVH Industries is 3.26 times less risky than TransAct Technologies. It trades about 0.11 of its potential returns per unit of risk. TransAct Technologies Incorporated is currently generating about -0.27 per unit of risk. If you would invest  499.00  in KVH Industries on March 4, 2024 and sell it today you would earn a total of  19.00  from holding KVH Industries or generate 3.81% return on investment over 90 days.

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

KVH Industries  vs.  TransAct Technologies Incorpor

KVH Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, KVH Industries may actually be approaching a critical reversion point that can send shares even higher in July 2024.

TransAct Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TransAct Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KVH Industries and TransAct Technologies

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

The idea behind KVH Industries and TransAct Technologies Incorporated 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.