Correlation Between Keyence and Keysight Technologies

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

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

Diversification Opportunities for Keyence and Keysight Technologies

-0.03

Correlation Coefficient

Keyence  Keysight Technologies

Good diversification

The 3 months correlation between Keyence and Keysight is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Keyence and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and Keyence 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 Keyence are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Keyence i.e., Keyence and Keysight Technologies go up and down completely randomly.

Pair Corralation between Keyence and Keysight Technologies

Assuming the 90 days horizon Keyence is expected to under-perform the Keysight Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Keyence is 1.17 times less risky than Keysight Technologies. The stock trades about -0.13 of its potential returns per unit of risk. The Keysight Technologies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12,350  in Keysight Technologies on April 24, 2025 and sell it today you would earn a total of  1,746  from holding Keysight Technologies or generate 14.14% return on investment over 90 days.

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

Keyence  vs.  Keysight Technologies

Keyence

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keyence has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Keysight Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Keysight Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keyence and Keysight Technologies

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

The idea behind Keyence and Keysight Technologies 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.