Correlation Between KWESST Micro and Lilium NV

Can any of the company-specific risk be diversified away by investing in both KWESST Micro and Lilium NV 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 Lilium NV 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 Lilium NV, you can compare the effects of market volatilities on KWESST Micro and Lilium NV 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 Lilium NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of KWESST Micro and Lilium NV.

Diversification Opportunities for KWESST Micro and Lilium NV

0.87

Correlation Coefficient

KWESST Micro  Lilium NV

Very poor diversification

The 3 months correlation between KWESST and Lilium is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and Lilium NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium NV 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 Lilium NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium NV has no effect on the direction of KWESST Micro i.e., KWESST Micro and Lilium NV go up and down completely randomly.

Pair Corralation between KWESST Micro and Lilium NV

Considering the 90-day investment horizon KWESST Micro Systems is expected to under-perform the Lilium NV. In addition to that, KWESST Micro is 1.65 times more volatile than Lilium NV. It trades about -0.04 of its total potential returns per unit of risk. Lilium NV is currently generating about 0.0 per unit of volatility. If you would invest  165.00  in Lilium NV on July 12, 2024 and sell it today you would lose (87.00) from holding Lilium NV or give up 52.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

KWESST Micro Systems  vs.  Lilium NV

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 November 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lilium NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lilium NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with KWESST Micro and Lilium NV

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

The idea behind KWESST Micro Systems and Lilium NV 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.