Correlation Between KAT Exploration and CTR Investments

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

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

Diversification Opportunities for KAT Exploration and CTR Investments

0.7

Correlation Coefficient

KAT Exploration  CTR Investments

Poor diversification

The 3 months correlation between KAT and CTR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding KAT Exploration and CTR Investments Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTR Investments Cons and KAT Exploration 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 KAT Exploration are associated (or correlated) with CTR Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTR Investments Cons has no effect on the direction of KAT Exploration i.e., KAT Exploration and CTR Investments go up and down completely randomly.

Pair Corralation between KAT Exploration and CTR Investments

Given the investment horizon of 90 days KAT Exploration is expected to generate 1.63 times more return on investment than CTR Investments. However, KAT Exploration is 1.63 times more volatile than CTR Investments Consulting. It trades about 0.03 of its potential returns per unit of risk. CTR Investments Consulting is currently generating about -0.15 per unit of risk. If you would invest  0.04  in KAT Exploration on September 16, 2024 and sell it today you would lose (0.02) from holding KAT Exploration or give up 50.0% of portfolio value over 90 days.

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

KAT Exploration  vs.  CTR Investments Consulting

KAT Exploration

Risk-Adjusted Performance

2 of 100

Weak

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

CTR Investments Cons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTR Investments Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KAT Exploration and CTR Investments

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

The idea behind KAT Exploration and CTR Investments Consulting 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.