Correlation Between Indie Semiconductor and Katapult Holdings

Can any of the company-specific risk be diversified away by investing in both Indie Semiconductor and Katapult Holdings 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 Indie Semiconductor and Katapult Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indie Semiconductor Warrant and Katapult Holdings Equity, you can compare the effects of market volatilities on Indie Semiconductor and Katapult Holdings 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 Indie Semiconductor with a short position of Katapult Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indie Semiconductor and Katapult Holdings.

Diversification Opportunities for Indie Semiconductor and Katapult Holdings

0.4

Correlation Coefficient

Indie Semiconductor  Katapult Holdings

Very weak diversification

The 3 months correlation between Indie and Katapult is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Indie Semiconductor Warrant and Katapult Holdings Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katapult Holdings Equity and Indie Semiconductor 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 Indie Semiconductor Warrant are associated (or correlated) with Katapult Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katapult Holdings Equity has no effect on the direction of Indie Semiconductor i.e., Indie Semiconductor and Katapult Holdings go up and down completely randomly.

Pair Corralation between Indie Semiconductor and Katapult Holdings

If you would invest  0.84  in Katapult Holdings Equity on October 1, 2024 and sell it today you would lose (0.34) from holding Katapult Holdings Equity or give up 40.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	2.7%
Values	Daily Returns

Indie Semiconductor Warrant  vs.  Katapult Holdings Equity

Indie Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Katapult Holdings Equity

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Katapult Holdings Equity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Katapult Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indie Semiconductor and Katapult Holdings

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

The idea behind Indie Semiconductor Warrant and Katapult Holdings Equity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.