Correlation Between Katipult Technology and Pond Technologies

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

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

Diversification Opportunities for Katipult Technology and Pond Technologies

-0.22

Correlation Coefficient

Katipult Technology  Pond Technologies

Very good diversification

The 3 months correlation between Katipult and Pond is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Katipult Technology Corp and Pond Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pond Technologies and Katipult Technology 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 Katipult Technology Corp are associated (or correlated) with Pond Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pond Technologies has no effect on the direction of Katipult Technology i.e., Katipult Technology and Pond Technologies go up and down completely randomly.

Pair Corralation between Katipult Technology and Pond Technologies

Assuming the 90 days trading horizon Katipult Technology is expected to generate 2.06 times less return on investment than Pond Technologies. But when comparing it to its historical volatility, Katipult Technology Corp is 1.12 times less risky than Pond Technologies. It trades about 0.03 of its potential returns per unit of risk. Pond Technologies Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8.50  in Pond Technologies Holdings on October 4, 2024 and sell it today you would lose (6.00) from holding Pond Technologies Holdings or give up 70.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Katipult Technology Corp  vs.  Pond Technologies Holdings

Katipult Technology Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Katipult Technology Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Katipult Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pond Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pond Technologies Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Pond Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Katipult Technology and Pond Technologies

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

The idea behind Katipult Technology Corp and Pond Technologies 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.