Correlation Between KAT Exploration and Biopower Operations
Can any of the company-specific risk be diversified away by investing in both KAT Exploration and Biopower Operations 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 Biopower Operations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAT Exploration and Biopower Operations Corp, you can compare the effects of market volatilities on KAT Exploration and Biopower Operations 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 Biopower Operations. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAT Exploration and Biopower Operations.
Diversification Opportunities for KAT Exploration and Biopower Operations
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KAT and Biopower is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KAT Exploration and Biopower Operations Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biopower Operations Corp 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 Biopower Operations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biopower Operations Corp has no effect on the direction of KAT Exploration i.e., KAT Exploration and Biopower Operations go up and down completely randomly.
Pair Corralation between KAT Exploration and Biopower Operations
Given the investment horizon of 90 days KAT Exploration is expected to generate 3.75 times more return on investment than Biopower Operations. However, KAT Exploration is 3.75 times more volatile than Biopower Operations Corp. It trades about 0.08 of its potential returns per unit of risk. Biopower Operations Corp is currently generating about 0.04 per unit of risk. If you would invest 0.18 in KAT Exploration on September 3, 2024 and sell it today you would lose (0.16) from holding KAT Exploration or give up 88.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
KAT Exploration vs. Biopower Operations Corp
Performance |
| Timeline |
| KAT Exploration |
| Biopower Operations Corp |
KAT Exploration and Biopower Operations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAT Exploration and Biopower Operations
The main advantage of trading using opposite KAT Exploration and Biopower Operations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAT Exploration position performs unexpectedly, Biopower Operations 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 Biopower Operations will offset losses from the drop in Biopower Operations' long position.| KAT Exploration vs. Southern ITS International | KAT Exploration vs. UHF Logistics Group | KAT Exploration vs. Intl Star | KAT Exploration vs. Church Crawford |
| Biopower Operations vs. Seadrill Limited | Biopower Operations vs. Noble plc | Biopower Operations vs. Borr Drilling | Biopower Operations vs. SCOR PK |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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