Correlation Between Karmarts Public and Firetrade Engineering

Can any of the company-specific risk be diversified away by investing in both Karmarts Public and Firetrade Engineering 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 Karmarts Public and Firetrade Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Karmarts Public and Firetrade Engineering Public, you can compare the effects of market volatilities on Karmarts Public and Firetrade Engineering 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 Karmarts Public with a short position of Firetrade Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karmarts Public and Firetrade Engineering.

Diversification Opportunities for Karmarts Public and Firetrade Engineering

0.06

Correlation Coefficient

Karmarts Public  Firetrade Engineering

Significant diversification

The 3 months correlation between Karmarts and Firetrade is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Karmarts Public and Firetrade Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firetrade Engineering and Karmarts Public 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 Karmarts Public are associated (or correlated) with Firetrade Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firetrade Engineering has no effect on the direction of Karmarts Public i.e., Karmarts Public and Firetrade Engineering go up and down completely randomly.

Pair Corralation between Karmarts Public and Firetrade Engineering

Assuming the 90 days trading horizon Karmarts Public is expected to under-perform the Firetrade Engineering. In addition to that, Karmarts Public is 1.93 times more volatile than Firetrade Engineering Public. It trades about -0.14 of its total potential returns per unit of risk. Firetrade Engineering Public is currently generating about -0.1 per unit of volatility. If you would invest  155.00  in Firetrade Engineering Public on October 8, 2024 and sell it today you would lose (3.00) from holding Firetrade Engineering Public or give up 1.94% of portfolio value over 90 days.

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

Karmarts Public  vs.  Firetrade Engineering Public

Karmarts Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Karmarts Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Firetrade Engineering

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Firetrade Engineering Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Firetrade Engineering is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Karmarts Public and Firetrade Engineering

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

The idea behind Karmarts Public and Firetrade Engineering Public 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.