Correlation Between Kasten and Supurva Healthcare

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

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

Diversification Opportunities for Kasten and Supurva Healthcare

-0.02

Correlation Coefficient

Kasten  Supurva Healthcare

Good diversification

The 3 months correlation between Kasten and Supurva is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Kasten Inc and Supurva Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supurva Healthcare 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 Supurva Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supurva Healthcare has no effect on the direction of Kasten i.e., Kasten and Supurva Healthcare go up and down completely randomly.

Pair Corralation between Kasten and Supurva Healthcare

Given the investment horizon of 90 days Kasten is expected to generate 10.68 times less return on investment than Supurva Healthcare. But when comparing it to its historical volatility, Kasten Inc is 2.53 times less risky than Supurva Healthcare. It trades about 0.04 of its potential returns per unit of risk. Supurva Healthcare Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Supurva Healthcare Group on September 4, 2024 and sell it today you would earn a total of  0.01  from holding Supurva Healthcare Group or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Kasten Inc  vs.  Supurva Healthcare Group

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.

Supurva Healthcare

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Supurva Healthcare Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Supurva Healthcare showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kasten and Supurva Healthcare

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

The idea behind Kasten Inc and Supurva Healthcare 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.