Correlation Between Katapult Holdings and SOS

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

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

Diversification Opportunities for Katapult Holdings and SOS

0.48

Correlation Coefficient

Katapult Holdings  SOS

Very weak diversification

The 3 months correlation between Katapult and SOS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Katapult Holdings and SOS Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS Limited 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 SOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOS Limited has no effect on the direction of Katapult Holdings i.e., Katapult Holdings and SOS go up and down completely randomly.

Pair Corralation between Katapult Holdings and SOS

Given the investment horizon of 90 days Katapult Holdings is expected to under-perform the SOS. But the stock apears to be less risky and, when comparing its historical volatility, Katapult Holdings is 1.45 times less risky than SOS. The stock trades about -0.01 of its potential returns per unit of risk. The SOS Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  4,035  in SOS Limited on September 19, 2024 and sell it today you would lose (3,263) from holding SOS Limited or give up 80.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Katapult Holdings  vs.  SOS Limited

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 unsteady 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.

SOS Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOS Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, SOS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Katapult Holdings and SOS

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

The idea behind Katapult Holdings and SOS Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.