Correlation Between KWESST Micro and KWESST Micro

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

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

Diversification Opportunities for KWESST Micro and KWESST Micro

0.54

Correlation Coefficient

KWESST Micro  KWESST Micro

Very weak diversification

The 3 months correlation between KWESST and KWESST is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and KWESST Micro Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KWESST Micro Systems and KWESST Micro 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 KWESST Micro Systems are associated (or correlated) with KWESST Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KWESST Micro Systems has no effect on the direction of KWESST Micro i.e., KWESST Micro and KWESST Micro go up and down completely randomly.

Pair Corralation between KWESST Micro and KWESST Micro

Considering the 90-day investment horizon KWESST Micro Systems is expected to under-perform the KWESST Micro. But the stock apears to be less risky and, when comparing its historical volatility, KWESST Micro Systems is 20.4 times less risky than KWESST Micro. The stock trades about -0.02 of its potential returns per unit of risk. The KWESST Micro Systems is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  3.50  in KWESST Micro Systems on August 5, 2024 and sell it today you would lose (0.52) from holding KWESST Micro Systems or give up 14.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	47.69%
Values	Daily Returns

KWESST Micro Systems  vs.  KWESST Micro Systems

KWESST Micro Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KWESST Micro Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

KWESST Micro Systems

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in KWESST Micro Systems are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, KWESST Micro showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KWESST Micro and KWESST Micro

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

The idea behind KWESST Micro Systems and KWESST Micro Systems 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.