Correlation Between Global Atomic and Kraken Energy

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

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

Diversification Opportunities for Global Atomic and Kraken Energy

0.69

Correlation Coefficient

Global Atomic  Kraken Energy

Poor diversification

The 3 months correlation between Global and Kraken is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Global Atomic Corp and Kraken Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Energy Corp and Global Atomic 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 Global Atomic Corp are associated (or correlated) with Kraken Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Energy Corp has no effect on the direction of Global Atomic i.e., Global Atomic and Kraken Energy go up and down completely randomly.

Pair Corralation between Global Atomic and Kraken Energy

Assuming the 90 days horizon Global Atomic Corp is expected to under-perform the Kraken Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Global Atomic Corp is 1.93 times less risky than Kraken Energy. The otc stock trades about -0.03 of its potential returns per unit of risk. The Kraken Energy Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3.45  in Kraken Energy Corp on September 4, 2024 and sell it today you would lose (0.81) from holding Kraken Energy Corp or give up 23.48% of portfolio value over 90 days.

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

Global Atomic Corp  vs.  Kraken Energy Corp

Global Atomic Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Atomic Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Kraken Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kraken Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kraken Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global Atomic and Kraken Energy

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

The idea behind Global Atomic Corp and Kraken Energy 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.