Correlation Between KAT Exploration and Aqua Power
Can any of the company-specific risk be diversified away by investing in both KAT Exploration and Aqua Power 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 KAT Exploration and Aqua Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAT Exploration and Aqua Power Systems, you can compare the effects of market volatilities on KAT Exploration and Aqua Power 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 KAT Exploration with a short position of Aqua Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAT Exploration and Aqua Power.
Diversification Opportunities for KAT Exploration and Aqua Power
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KAT and Aqua is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding KAT Exploration and Aqua Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Power Systems and KAT Exploration 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 KAT Exploration are associated (or correlated) with Aqua Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Power Systems has no effect on the direction of KAT Exploration i.e., KAT Exploration and Aqua Power go up and down completely randomly.
Pair Corralation between KAT Exploration and Aqua Power
Given the investment horizon of 90 days KAT Exploration is expected to generate 7.98 times more return on investment than Aqua Power. However, KAT Exploration is 7.98 times more volatile than Aqua Power Systems. It trades about 0.12 of its potential returns per unit of risk. Aqua Power Systems is currently generating about 0.12 per unit of risk. If you would invest 0.02 in KAT Exploration on September 3, 2024 and sell it today you would earn a total of 0.00 from holding KAT Exploration or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAT Exploration vs. Aqua Power Systems
Performance |
| Timeline |
| KAT Exploration |
| Aqua Power Systems |
KAT Exploration and Aqua Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAT Exploration and Aqua Power
The main advantage of trading using opposite KAT Exploration and Aqua Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAT Exploration position performs unexpectedly, Aqua Power 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 Aqua Power will offset losses from the drop in Aqua Power's long position.| KAT Exploration vs. Southern ITS International | KAT Exploration vs. UHF Logistics Group | KAT Exploration vs. Intl Star | KAT Exploration vs. Church Crawford |
| Aqua Power vs. Manaris Corp | Aqua Power vs. Green Planet Bio | Aqua Power vs. Continental Beverage Brands | Aqua Power vs. Opus Magnum Ameris |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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