Correlation Between Armada Acquisition and Kernel Group

Can any of the company-specific risk be diversified away by investing in both Armada Acquisition and Kernel Group 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 Armada Acquisition and Kernel Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Acquisition Corp and Kernel Group Holdings, you can compare the effects of market volatilities on Armada Acquisition and Kernel Group 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 Armada Acquisition with a short position of Kernel Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Acquisition and Kernel Group.

Diversification Opportunities for Armada Acquisition and Kernel Group

0.16

Correlation Coefficient

Armada Acquisition  Kernel Group

Average diversification

The 3 months correlation between Armada and Kernel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Armada Acquisition Corp and Kernel Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kernel Group Holdings and Armada Acquisition 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 Armada Acquisition Corp are associated (or correlated) with Kernel Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kernel Group Holdings has no effect on the direction of Armada Acquisition i.e., Armada Acquisition and Kernel Group go up and down completely randomly.

Pair Corralation between Armada Acquisition and Kernel Group

Assuming the 90 days horizon Armada Acquisition Corp is expected to under-perform the Kernel Group. In addition to that, Armada Acquisition is 6.81 times more volatile than Kernel Group Holdings. It trades about -0.07 of its total potential returns per unit of risk. Kernel Group Holdings is currently generating about -0.01 per unit of volatility. If you would invest  1,067  in Kernel Group Holdings on October 3, 2024 and sell it today you would lose (37.00) from holding Kernel Group Holdings or give up 3.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.26%
Values	Daily Returns

Armada Acquisition Corp  vs.  Kernel Group Holdings

Armada Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Armada Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kernel Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kernel Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kernel Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Armada Acquisition and Kernel Group

The main advantage of trading using opposite Armada Acquisition and Kernel Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Acquisition position performs unexpectedly, Kernel Group 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 Kernel Group will offset losses from the drop in Kernel Group's long position.

The idea behind Armada Acquisition Corp and Kernel Group Holdings 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.