Correlation Between BigBearai Holdings and Kainos Group

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

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

Diversification Opportunities for BigBearai Holdings and Kainos Group

0.08

Correlation Coefficient

BigBearai Holdings  Kainos Group

Significant diversification

The 3 months correlation between BigBearai and Kainos is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BigBearai Holdings and Kainos Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kainos Group plc and BigBearai Holdings 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 BigBearai Holdings are associated (or correlated) with Kainos Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kainos Group plc has no effect on the direction of BigBearai Holdings i.e., BigBearai Holdings and Kainos Group go up and down completely randomly.

Pair Corralation between BigBearai Holdings and Kainos Group

Given the investment horizon of 90 days BigBearai Holdings is expected to under-perform the Kainos Group. In addition to that, BigBearai Holdings is 2.33 times more volatile than Kainos Group plc. It trades about -0.55 of its total potential returns per unit of risk. Kainos Group plc is currently generating about -0.1 per unit of volatility. If you would invest  1,029  in Kainos Group plc on December 10, 2024 and sell it today you would lose (81.00) from holding Kainos Group plc or give up 7.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BigBearai Holdings  vs.  Kainos Group plc

BigBearai Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BigBearai Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, BigBearai Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kainos Group plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kainos Group plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Kainos Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BigBearai Holdings and Kainos Group

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

The idea behind BigBearai Holdings and Kainos Group plc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.