Correlation Between Forward Water and Kraken Robotics

Can any of the company-specific risk be diversified away by investing in both Forward Water and Kraken Robotics 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 Forward Water and Kraken Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Forward Water Technologies and Kraken Robotics, you can compare the effects of market volatilities on Forward Water and Kraken Robotics 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 Forward Water with a short position of Kraken Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forward Water and Kraken Robotics.

Diversification Opportunities for Forward Water and Kraken Robotics

-0.34

Correlation Coefficient

Forward Water  Kraken Robotics

Very good diversification

The 3 months correlation between Forward and Kraken is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Forward Water Technologies and Kraken Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Robotics and Forward Water 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 Forward Water Technologies are associated (or correlated) with Kraken Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Robotics has no effect on the direction of Forward Water i.e., Forward Water and Kraken Robotics go up and down completely randomly.

Pair Corralation between Forward Water and Kraken Robotics

Assuming the 90 days trading horizon Forward Water Technologies is expected to generate 3.92 times more return on investment than Kraken Robotics. However, Forward Water is 3.92 times more volatile than Kraken Robotics. It trades about 0.03 of its potential returns per unit of risk. Kraken Robotics is currently generating about 0.1 per unit of risk. If you would invest  55.00  in Forward Water Technologies on September 19, 2024 and sell it today you would lose (47.00) from holding Forward Water Technologies or give up 85.45% of portfolio value over 90 days.

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

Forward Water Technologies  vs.  Kraken Robotics

Forward Water Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forward Water Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Forward Water is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kraken Robotics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kraken Robotics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kraken Robotics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forward Water and Kraken Robotics

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

The idea behind Forward Water Technologies and Kraken Robotics 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.