Correlation Between Katapult Holdings and Evertec

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

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

Diversification Opportunities for Katapult Holdings and Evertec

-0.66

Correlation Coefficient

Katapult Holdings  Evertec

Excellent diversification

The 3 months correlation between Katapult and Evertec is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Katapult Holdings and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and Katapult Holdings 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 Katapult Holdings are associated (or correlated) with Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of Katapult Holdings i.e., Katapult Holdings and Evertec go up and down completely randomly.

Pair Corralation between Katapult Holdings and Evertec

Given the investment horizon of 90 days Katapult Holdings is expected to under-perform the Evertec. In addition to that, Katapult Holdings is 3.37 times more volatile than Evertec. It trades about -0.01 of its total potential returns per unit of risk. Evertec is currently generating about 0.02 per unit of volatility. If you would invest  3,180  in Evertec on September 19, 2024 and sell it today you would earn a total of  305.00  from holding Evertec or generate 9.59% return on investment over 90 days.

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

Katapult Holdings  vs.  Evertec

Katapult Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Katapult Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Evertec

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Evertec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Evertec is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Katapult Holdings and Evertec

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

The idea behind Katapult Holdings and Evertec 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.