Correlation Between Kaspa and NULS
Can any of the company-specific risk be diversified away by investing in both Kaspa and NULS 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 Kaspa and NULS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaspa and NULS, you can compare the effects of market volatilities on Kaspa and NULS 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 Kaspa with a short position of NULS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaspa and NULS.
Diversification Opportunities for Kaspa and NULS
Poor diversification
The 3 months correlation between Kaspa and NULS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kaspa and NULS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NULS and Kaspa 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 Kaspa are associated (or correlated) with NULS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NULS has no effect on the direction of Kaspa i.e., Kaspa and NULS go up and down completely randomly.
Pair Corralation between Kaspa and NULS
Assuming the 90 days trading horizon Kaspa is expected to generate 1.58 times less return on investment than NULS. But when comparing it to its historical volatility, Kaspa is 1.56 times less risky than NULS. It trades about 0.05 of its potential returns per unit of risk. NULS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 19.00 in NULS on August 27, 2024 and sell it today you would earn a total of 18.00 from holding NULS or generate 94.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 45.15% |
| Values | Daily Returns |
Kaspa vs. NULS
Performance |
| Timeline |
| Kaspa |
| NULS |
Kaspa and NULS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaspa and NULS
The main advantage of trading using opposite Kaspa and NULS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaspa position performs unexpectedly, NULS 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 NULS will offset losses from the drop in NULS's long position.The idea behind Kaspa and NULS 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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