Correlation Between CF Acquisition and Kernel Group

Can any of the company-specific risk be diversified away by investing in both CF 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 CF 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 CF Acquisition Corp and Kernel Group Holdings, you can compare the effects of market volatilities on CF 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 CF Acquisition with a short position of Kernel Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Acquisition and Kernel Group.

Diversification Opportunities for CF Acquisition and Kernel Group

0.29

Correlation Coefficient

CF Acquisition  Kernel Group

Modest diversification

The 3 months correlation between CFFE and Kernel is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CF 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 CF 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 CF 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 CF Acquisition i.e., CF Acquisition and Kernel Group go up and down completely randomly.

Pair Corralation between CF Acquisition and Kernel Group

If you would invest  1,058  in Kernel Group Holdings on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Kernel Group Holdings or generate 0.0% return on investment over 90 days.

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

CF Acquisition Corp  vs.  Kernel Group Holdings

CF Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CF Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CF Acquisition is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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. In spite of comparatively stable essential indicators, Kernel Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CF Acquisition and Kernel Group

The main advantage of trading using opposite CF Acquisition and Kernel Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF 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 CF 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.