Correlation Between Kasten and Cloudweb

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

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

Diversification Opportunities for Kasten and Cloudweb

0.71

Correlation Coefficient

Kasten  Cloudweb

Poor diversification

The 3 months correlation between Kasten and Cloudweb is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kasten Inc and Cloudweb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudweb 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 Cloudweb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudweb has no effect on the direction of Kasten i.e., Kasten and Cloudweb go up and down completely randomly.

Pair Corralation between Kasten and Cloudweb

Given the investment horizon of 90 days Kasten Inc is expected to generate 1.72 times more return on investment than Cloudweb. However, Kasten is 1.72 times more volatile than Cloudweb. It trades about 0.05 of its potential returns per unit of risk. Cloudweb is currently generating about 0.01 per unit of risk. If you would invest  0.75  in Kasten Inc on October 20, 2024 and sell it today you would lose (0.43) from holding Kasten Inc or give up 57.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Kasten Inc  vs.  Cloudweb

Kasten Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kasten Inc are ranked lower than 3 (%) 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.

Cloudweb

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cloudweb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Cloudweb may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kasten and Cloudweb

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

The idea behind Kasten Inc and Cloudweb 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.