Correlation Between Fat Projects and Khosla Ventures

Can any of the company-specific risk be diversified away by investing in both Fat Projects and Khosla Ventures 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 Fat Projects and Khosla Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fat Projects Acquisition and Khosla Ventures Acquisition, you can compare the effects of market volatilities on Fat Projects and Khosla Ventures 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 Fat Projects with a short position of Khosla Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fat Projects and Khosla Ventures.

Diversification Opportunities for Fat Projects and Khosla Ventures

0.45

Correlation Coefficient

Fat Projects  Khosla Ventures

Very weak diversification

The 3 months correlation between Fat and Khosla is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fat Projects Acquisition and Khosla Ventures Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khosla Ventures Acqu and Fat Projects 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 Fat Projects Acquisition are associated (or correlated) with Khosla Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khosla Ventures Acqu has no effect on the direction of Fat Projects i.e., Fat Projects and Khosla Ventures go up and down completely randomly.

Pair Corralation between Fat Projects and Khosla Ventures

Given the investment horizon of 90 days Fat Projects Acquisition is expected to generate 1.92 times more return on investment than Khosla Ventures. However, Fat Projects is 1.92 times more volatile than Khosla Ventures Acquisition. It trades about 0.08 of its potential returns per unit of risk. Khosla Ventures Acquisition is currently generating about 0.13 per unit of risk. If you would invest  1,028  in Fat Projects Acquisition on October 11, 2024 and sell it today you would earn a total of  61.00  from holding Fat Projects Acquisition or generate 5.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

Fat Projects Acquisition  vs.  Khosla Ventures Acquisition

Fat Projects Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fat Projects Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fat Projects is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Khosla Ventures Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Khosla Ventures Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Khosla Ventures is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fat Projects and Khosla Ventures

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

The idea behind Fat Projects Acquisition and Khosla Ventures Acquisition 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.