Correlation Between Creative Realities and Key Tronic

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

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

Diversification Opportunities for Creative Realities and Key Tronic

0.83

Correlation Coefficient

Creative Realities  Key Tronic

Very poor diversification

The 3 months correlation between Creative and Key is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Creative Realities and Key Tronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Tronic and Creative Realities 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 Creative Realities are associated (or correlated) with Key Tronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Tronic has no effect on the direction of Creative Realities i.e., Creative Realities and Key Tronic go up and down completely randomly.

Pair Corralation between Creative Realities and Key Tronic

Given the investment horizon of 90 days Creative Realities is expected to generate 1.87 times more return on investment than Key Tronic. However, Creative Realities is 1.87 times more volatile than Key Tronic. It trades about 0.15 of its potential returns per unit of risk. Key Tronic is currently generating about 0.13 per unit of risk. If you would invest  194.00  in Creative Realities on April 25, 2025 and sell it today you would earn a total of  111.00  from holding Creative Realities or generate 57.22% return on investment over 90 days.

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

Creative Realities  vs.  Key Tronic

Creative Realities

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Creative Realities are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Creative Realities showed solid returns over the last few months and may actually be approaching a breakup point.

Key Tronic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Key Tronic are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Key Tronic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creative Realities and Key Tronic

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

The idea behind Creative Realities and Key Tronic 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.