Correlation Between Aluula Composites and Kraken Robotics

Can any of the company-specific risk be diversified away by investing in both Aluula Composites and Kraken Robotics 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 Aluula Composites and Kraken Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aluula Composites and Kraken Robotics, you can compare the effects of market volatilities on Aluula Composites and Kraken Robotics 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 Aluula Composites with a short position of Kraken Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluula Composites and Kraken Robotics.

Diversification Opportunities for Aluula Composites and Kraken Robotics

-0.56

Correlation Coefficient

Aluula Composites  Kraken Robotics

Excellent diversification

The 3 months correlation between Aluula and Kraken is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aluula Composites and Kraken Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Robotics and Aluula Composites 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 Aluula Composites are associated (or correlated) with Kraken Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Robotics has no effect on the direction of Aluula Composites i.e., Aluula Composites and Kraken Robotics go up and down completely randomly.

Pair Corralation between Aluula Composites and Kraken Robotics

Assuming the 90 days trading horizon Aluula Composites is expected to generate 35.89 times less return on investment than Kraken Robotics. In addition to that, Aluula Composites is 1.85 times more volatile than Kraken Robotics. It trades about 0.0 of its total potential returns per unit of risk. Kraken Robotics is currently generating about 0.2 per unit of volatility. If you would invest  170.00  in Kraken Robotics on September 14, 2024 and sell it today you would earn a total of  108.00  from holding Kraken Robotics or generate 63.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aluula Composites  vs.  Kraken Robotics

Aluula Composites

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluula Composites has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aluula Composites is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kraken Robotics

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kraken Robotics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kraken Robotics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aluula Composites and Kraken Robotics

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

The idea behind Aluula Composites and Kraken Robotics 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.