Correlation Between KARRAT and BounceBit
Can any of the company-specific risk be diversified away by investing in both KARRAT and BounceBit 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 KARRAT and BounceBit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KARRAT and BounceBit, you can compare the effects of market volatilities on KARRAT and BounceBit 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 KARRAT with a short position of BounceBit. Check out your portfolio center. Please also check ongoing floating volatility patterns of KARRAT and BounceBit.
Diversification Opportunities for KARRAT and BounceBit
Modest diversification
The 3 months correlation between KARRAT and BounceBit is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding KARRAT and BounceBit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BounceBit and KARRAT 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 KARRAT are associated (or correlated) with BounceBit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BounceBit has no effect on the direction of KARRAT i.e., KARRAT and BounceBit go up and down completely randomly.
Pair Corralation between KARRAT and BounceBit
Assuming the 90 days trading horizon KARRAT is expected to generate 25.12 times less return on investment than BounceBit. But when comparing it to its historical volatility, KARRAT is 3.48 times less risky than BounceBit. It trades about 0.01 of its potential returns per unit of risk. BounceBit is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.00 in BounceBit on August 25, 2024 and sell it today you would earn a total of 31.00 from holding BounceBit or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 26.21% |
| Values | Daily Returns |
KARRAT vs. BounceBit
Performance |
| Timeline |
| KARRAT |
| BounceBit |
KARRAT and BounceBit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KARRAT and BounceBit
The main advantage of trading using opposite KARRAT and BounceBit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KARRAT position performs unexpectedly, BounceBit 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 BounceBit will offset losses from the drop in BounceBit's long position.The idea behind KARRAT and BounceBit 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |