Correlation Between Kasten and A1

Can any of the company-specific risk be diversified away by investing in both Kasten and A1 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 Kasten and A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kasten Inc and A1 Group, you can compare the effects of market volatilities on Kasten and A1 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 Kasten with a short position of A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kasten and A1.

Diversification Opportunities for Kasten and A1

-0.19

Correlation Coefficient

Kasten  A1

Good diversification

The 3 months correlation between Kasten and A1 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kasten Inc and A1 Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1 Group and Kasten 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 Kasten Inc are associated (or correlated) with A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1 Group has no effect on the direction of Kasten i.e., Kasten and A1 go up and down completely randomly.

Pair Corralation between Kasten and A1

Given the investment horizon of 90 days Kasten Inc is expected to generate 1.95 times more return on investment than A1. However, Kasten is 1.95 times more volatile than A1 Group. It trades about 0.09 of its potential returns per unit of risk. A1 Group is currently generating about 0.03 per unit of risk. If you would invest  0.60  in Kasten Inc on December 26, 2024 and sell it today you would lose (0.10) from holding Kasten Inc or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Kasten Inc  vs.  A1 Group

Kasten Inc

Risk-Adjusted Performance

OK

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

A1 Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in A1 Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, A1 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kasten and A1

The main advantage of trading using opposite Kasten and A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kasten position performs unexpectedly, A1 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 A1 will offset losses from the drop in A1's long position.

The idea behind Kasten Inc and A1 Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..