Correlation Between Huntington Ingalls and KWESST Micro

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

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

Diversification Opportunities for Huntington Ingalls and KWESST Micro

0.69

Correlation Coefficient

Huntington Ingalls  KWESST Micro

Poor diversification

The 3 months correlation between Huntington and KWESST is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries 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 Huntington Ingalls 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 Huntington Ingalls Industries 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 Huntington Ingalls i.e., Huntington Ingalls and KWESST Micro go up and down completely randomly.

Pair Corralation between Huntington Ingalls and KWESST Micro

Considering the 90-day investment horizon Huntington Ingalls is expected to generate 10.08 times less return on investment than KWESST Micro. But when comparing it to its historical volatility, Huntington Ingalls Industries is 10.79 times less risky than KWESST Micro. It trades about 0.15 of its potential returns per unit of risk. KWESST Micro Systems is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  637.00  in KWESST Micro Systems on May 3, 2025 and sell it today you would earn a total of  448.00  from holding KWESST Micro Systems or generate 70.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	62.9%
Values	Daily Returns

Huntington Ingalls Industries  vs.  KWESST Micro Systems

Huntington Ingalls

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Ingalls Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Huntington Ingalls demonstrated solid returns over the last few months and may actually be approaching a breakup point.

KWESST Micro Systems

Risk-Adjusted Performance

Good

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 rather weak basic indicators, KWESST Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huntington Ingalls and KWESST Micro

The main advantage of trading using opposite Huntington Ingalls and KWESST Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Ingalls 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 Huntington Ingalls Industries 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.