Correlation Between KAT Exploration and C2E Energy

Can any of the company-specific risk be diversified away by investing in both KAT Exploration and C2E Energy 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 C2E Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KAT Exploration and C2E Energy, you can compare the effects of market volatilities on KAT Exploration and C2E Energy 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 C2E Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAT Exploration and C2E Energy.

Diversification Opportunities for KAT Exploration and C2E Energy

0.0

Correlation Coefficient

KAT Exploration  C2E Energy

Pay attention - limited upside

The 3 months correlation between KAT and C2E is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KAT Exploration and C2E Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C2E Energy 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 C2E Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C2E Energy has no effect on the direction of KAT Exploration i.e., KAT Exploration and C2E Energy go up and down completely randomly.

Pair Corralation between KAT Exploration and C2E Energy

If you would invest  0.03  in KAT Exploration on September 15, 2024 and sell it today you would lose (0.01) from holding KAT Exploration or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

KAT Exploration  vs.  C2E Energy

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 uncertain basic indicators, KAT Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

C2E Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C2E Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, C2E Energy is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with KAT Exploration and C2E Energy

The main advantage of trading using opposite KAT Exploration and C2E Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAT Exploration position performs unexpectedly, C2E Energy 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 C2E Energy will offset losses from the drop in C2E Energy's long position.

The idea behind KAT Exploration and C2E Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.