Correlation Between KARRAT and UPP

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

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

Diversification Opportunities for KARRAT and UPP

0.1

Correlation Coefficient

KARRAT  UPP

Average diversification

The 3 months correlation between KARRAT and UPP is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding KARRAT and UPP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPP and KARRAT 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 KARRAT are associated (or correlated) with UPP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPP has no effect on the direction of KARRAT i.e., KARRAT and UPP go up and down completely randomly.

Pair Corralation between KARRAT and UPP

Assuming the 90 days trading horizon KARRAT is expected to under-perform the UPP. But the crypto coin apears to be less risky and, when comparing its historical volatility, KARRAT is 3.77 times less risky than UPP. The crypto coin trades about -0.15 of its potential returns per unit of risk. The UPP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8.80  in UPP on November 27, 2024 and sell it today you would earn a total of  0.09  from holding UPP or generate 1.02% return on investment over 90 days.

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

KARRAT  vs.  UPP

KARRAT

Risk-Adjusted Performance

Very Weak

Over the last 90 days KARRAT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for KARRAT investors.

UPP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UPP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UPP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KARRAT and UPP

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

The idea behind KARRAT and UPP 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.

Check out your portfolio center.

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.