Correlation Between Konan Technology and BRIDGETEC Corp

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

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

Diversification Opportunities for Konan Technology and BRIDGETEC Corp

-0.42

Correlation Coefficient

Konan Technology  BRIDGETEC Corp

Very good diversification

The 3 months correlation between Konan and BRIDGETEC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Konan Technology and BRIDGETEC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIDGETEC Corp and Konan Technology 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 Konan Technology are associated (or correlated) with BRIDGETEC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIDGETEC Corp has no effect on the direction of Konan Technology i.e., Konan Technology and BRIDGETEC Corp go up and down completely randomly.

Pair Corralation between Konan Technology and BRIDGETEC Corp

Assuming the 90 days trading horizon Konan Technology is expected to generate 1.11 times less return on investment than BRIDGETEC Corp. In addition to that, Konan Technology is 2.05 times more volatile than BRIDGETEC Corp. It trades about 0.1 of its total potential returns per unit of risk. BRIDGETEC Corp is currently generating about 0.22 per unit of volatility. If you would invest  482,000  in BRIDGETEC Corp on September 15, 2024 and sell it today you would earn a total of  79,000  from holding BRIDGETEC Corp or generate 16.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Konan Technology  vs.  BRIDGETEC Corp

Konan Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Konan Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Konan Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

BRIDGETEC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRIDGETEC Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Konan Technology and BRIDGETEC Corp

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

The idea behind Konan Technology and BRIDGETEC Corp 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.