Correlation Between Kratos Defense and K Bro

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

By analyzing existing cross correlation between Kratos Defense Security and K Bro Linen, you can compare the effects of market volatilities on Kratos Defense and K Bro 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 Kratos Defense with a short position of K Bro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and K Bro.

Diversification Opportunities for Kratos Defense and K Bro

0.01

Correlation Coefficient

Kratos Defense  K Bro

Significant diversification

The 3 months correlation between Kratos and KBRLF is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and K Bro Linen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Bro Linen and Kratos Defense 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 Kratos Defense Security are associated (or correlated) with K Bro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Bro Linen has no effect on the direction of Kratos Defense i.e., Kratos Defense and K Bro go up and down completely randomly.

Pair Corralation between Kratos Defense and K Bro

Given the investment horizon of 90 days Kratos Defense Security is expected to generate 6.03 times more return on investment than K Bro. However, Kratos Defense is 6.03 times more volatile than K Bro Linen. It trades about 0.3 of its potential returns per unit of risk. K Bro Linen is currently generating about -0.04 per unit of risk. If you would invest  3,393  in Kratos Defense Security on May 11, 2025 and sell it today you would earn a total of  2,995  from holding Kratos Defense Security or generate 88.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.58%
Values	Daily Returns

Kratos Defense Security  vs.  K Bro Linen

Kratos Defense Security

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kratos Defense Security are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kratos Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

K Bro Linen

Risk-Adjusted Performance

Weakest

Over the last 90 days K Bro Linen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, K Bro is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kratos Defense and K Bro

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

The idea behind Kratos Defense Security and K Bro Linen 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..