Correlation Between Kamino and CHP

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

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

Diversification Opportunities for Kamino and CHP

-0.58

Correlation Coefficient

Kamino  CHP

Excellent diversification

The 3 months correlation between Kamino and CHP is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kamino and CHP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHP and Kamino 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 Kamino are associated (or correlated) with CHP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHP has no effect on the direction of Kamino i.e., Kamino and CHP go up and down completely randomly.

Pair Corralation between Kamino and CHP

Assuming the 90 days trading horizon Kamino is expected to generate 10.79 times more return on investment than CHP. However, Kamino is 10.79 times more volatile than CHP. It trades about 0.13 of its potential returns per unit of risk. CHP is currently generating about -0.06 per unit of risk. If you would invest  3.96  in Kamino on September 1, 2024 and sell it today you would earn a total of  11.04  from holding Kamino or generate 278.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kamino  vs.  CHP

Kamino

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kamino are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Kamino exhibited solid returns over the last few months and may actually be approaching a breakup point.

CHP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for CHP shareholders.

Pair Trading with Kamino and CHP

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

The idea behind Kamino and CHP 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 Transaction History module to view history of all your transactions and understand their impact on performance.