Correlation Between Red Cat and Kaival Brands
Can any of the company-specific risk be diversified away by investing in both Red Cat and Kaival Brands 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 Red Cat and Kaival Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and Kaival Brands Innovations, you can compare the effects of market volatilities on Red Cat and Kaival Brands 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 Red Cat with a short position of Kaival Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Kaival Brands.
Diversification Opportunities for Red Cat and Kaival Brands
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Red and Kaival is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Kaival Brands Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaival Brands Innovations and Red Cat 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 Red Cat Holdings are associated (or correlated) with Kaival Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaival Brands Innovations has no effect on the direction of Red Cat i.e., Red Cat and Kaival Brands go up and down completely randomly.
Pair Corralation between Red Cat and Kaival Brands
Given the investment horizon of 90 days Red Cat is expected to generate 1.17 times less return on investment than Kaival Brands. But when comparing it to its historical volatility, Red Cat Holdings is 3.34 times less risky than Kaival Brands. It trades about 0.16 of its potential returns per unit of risk. Kaival Brands Innovations is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 274.00 in Kaival Brands Innovations on November 5, 2024 and sell it today you would lose (134.00) from holding Kaival Brands Innovations or give up 48.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. Kaival Brands Innovations
Performance |
| Timeline |
| Red Cat Holdings |
| Kaival Brands Innovations |
Red Cat and Kaival Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Kaival Brands
The main advantage of trading using opposite Red Cat and Kaival Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Kaival Brands 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 Kaival Brands will offset losses from the drop in Kaival Brands' long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Kaival Brands vs. Green Globe International | Kaival Brands vs. Greenlane Holdings | Kaival Brands vs. RLX Technology | Kaival Brands vs. 22nd Century Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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