Correlation Between Kelt Exploration and Spartan Delta

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

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

Diversification Opportunities for Kelt Exploration and Spartan Delta

-0.39

Correlation Coefficient

Kelt Exploration  Spartan Delta

Very good diversification

The 3 months correlation between Kelt and Spartan is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kelt Exploration and Spartan Delta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spartan Delta Corp and Kelt 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 Kelt Exploration are associated (or correlated) with Spartan Delta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spartan Delta Corp has no effect on the direction of Kelt Exploration i.e., Kelt Exploration and Spartan Delta go up and down completely randomly.

Pair Corralation between Kelt Exploration and Spartan Delta

Assuming the 90 days horizon Kelt Exploration is expected to generate 0.8 times more return on investment than Spartan Delta. However, Kelt Exploration is 1.25 times less risky than Spartan Delta. It trades about 0.08 of its potential returns per unit of risk. Spartan Delta Corp is currently generating about -0.06 per unit of risk. If you would invest  442.00  in Kelt Exploration on September 3, 2024 and sell it today you would earn a total of  58.00  from holding Kelt Exploration or generate 13.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.06%
Values	Daily Returns

Kelt Exploration  vs.  Spartan Delta Corp

Kelt Exploration

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kelt Exploration are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kelt Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Spartan Delta Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spartan Delta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Kelt Exploration and Spartan Delta

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

The idea behind Kelt Exploration and Spartan Delta Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.