Correlation Between Kasten and KAT Exploration
Can any of the company-specific risk be diversified away by investing in both Kasten and KAT Exploration 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 Kasten and KAT Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kasten Inc and KAT Exploration, you can compare the effects of market volatilities on Kasten and KAT Exploration 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 Kasten with a short position of KAT Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kasten and KAT Exploration.
Diversification Opportunities for Kasten and KAT Exploration
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kasten and KAT is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kasten Inc and KAT Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAT Exploration and Kasten 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 Kasten Inc are associated (or correlated) with KAT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAT Exploration has no effect on the direction of Kasten i.e., Kasten and KAT Exploration go up and down completely randomly.
Pair Corralation between Kasten and KAT Exploration
Given the investment horizon of 90 days Kasten is expected to generate 5.04 times less return on investment than KAT Exploration. But when comparing it to its historical volatility, Kasten Inc is 3.44 times less risky than KAT Exploration. It trades about 0.05 of its potential returns per unit of risk. KAT Exploration is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.19 in KAT Exploration on September 1, 2024 and sell it today you would lose (0.17) from holding KAT Exploration or give up 89.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kasten Inc vs. KAT Exploration
Performance |
| Timeline |
| Kasten Inc |
| KAT Exploration |
Kasten and KAT Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kasten and KAT Exploration
The main advantage of trading using opposite Kasten and KAT Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kasten position performs unexpectedly, KAT Exploration 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 KAT Exploration will offset losses from the drop in KAT Exploration's long position.| Kasten vs. Interups | Kasten vs. Church Crawford | Kasten vs. Active Health Foods | Kasten vs. Gold Ent Group |
| KAT Exploration vs. Southern ITS International | KAT Exploration vs. UHF Logistics Group | KAT Exploration vs. Intl Star | KAT Exploration vs. Church Crawford |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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