Correlation Between Champion Iron and Katipult Technology

Can any of the company-specific risk be diversified away by investing in both Champion Iron and Katipult Technology 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 Champion Iron and Katipult Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champion Iron and Katipult Technology Corp, you can compare the effects of market volatilities on Champion Iron and Katipult Technology 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 Champion Iron with a short position of Katipult Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Katipult Technology.

Diversification Opportunities for Champion Iron and Katipult Technology

0.33

Correlation Coefficient

Champion Iron  Katipult Technology

Weak diversification

The 3 months correlation between Champion and Katipult is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Katipult Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katipult Technology Corp and Champion Iron 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 Champion Iron are associated (or correlated) with Katipult Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katipult Technology Corp has no effect on the direction of Champion Iron i.e., Champion Iron and Katipult Technology go up and down completely randomly.

Pair Corralation between Champion Iron and Katipult Technology

Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Katipult Technology. But the stock apears to be less risky and, when comparing its historical volatility, Champion Iron is 17.2 times less risky than Katipult Technology. The stock trades about -0.39 of its potential returns per unit of risk. The Katipult Technology Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Katipult Technology Corp on October 10, 2024 and sell it today you would earn a total of  0.50  from holding Katipult Technology Corp or generate 100.0% return on investment over 90 days.

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

Champion Iron  vs.  Katipult Technology Corp

Champion Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Katipult Technology Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Katipult Technology Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Katipult Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champion Iron and Katipult Technology

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

The idea behind Champion Iron and Katipult Technology Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..