Correlation Between Sun Country and KVH Industries

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

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

Diversification Opportunities for Sun Country and KVH Industries

0.19

Correlation Coefficient

Sun Country  KVH Industries

Average diversification

The 3 months correlation between Sun and KVH is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and Sun Country 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 Sun Country Airlines 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 Sun Country i.e., Sun Country and KVH Industries go up and down completely randomly.

Pair Corralation between Sun Country and KVH Industries

Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the KVH Industries. But the stock apears to be less risky and, when comparing its historical volatility, Sun Country Airlines is 1.06 times less risky than KVH Industries. The stock trades about -0.08 of its potential returns per unit of risk. The KVH Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  469.00  in KVH Industries on February 2, 2024 and sell it today you would earn a total of  20.00  from holding KVH Industries or generate 4.26% return on investment over 90 days.

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

Sun Country Airlines  vs.  KVH Industries

Sun Country Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Country Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Sun Country is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

KVH Industries

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, KVH Industries is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sun Country and KVH Industries

The main advantage of trading using opposite Sun Country and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country 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 Sun Country Airlines 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.

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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 Stocks Directory module to find actively traded stocks across global markets.