Correlation Between Kaspa and UTK
Can any of the company-specific risk be diversified away by investing in both Kaspa and UTK 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 UTK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaspa and UTK, you can compare the effects of market volatilities on Kaspa and UTK 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 UTK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaspa and UTK.
Diversification Opportunities for Kaspa and UTK
Very poor diversification
The 3 months correlation between Kaspa and UTK is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kaspa and UTK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTK 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 UTK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTK has no effect on the direction of Kaspa i.e., Kaspa and UTK go up and down completely randomly.
Pair Corralation between Kaspa and UTK
Assuming the 90 days trading horizon Kaspa is expected to generate 1.41 times more return on investment than UTK. However, Kaspa is 1.41 times more volatile than UTK. It trades about 0.05 of its potential returns per unit of risk. UTK is currently generating about -0.01 per unit of risk. If you would invest 13.00 in Kaspa on August 27, 2024 and sell it today you would earn a total of 2.00 from holding Kaspa or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 45.15% |
| Values | Daily Returns |
Kaspa vs. UTK
Performance |
| Timeline |
| Kaspa |
| UTK |
Kaspa and UTK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaspa and UTK
The main advantage of trading using opposite Kaspa and UTK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaspa position performs unexpectedly, UTK 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 UTK will offset losses from the drop in UTK's long position.The idea behind Kaspa and UTK 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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