Correlation Between Katapult Holdings and Indie Semiconductor

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

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

Diversification Opportunities for Katapult Holdings and Indie Semiconductor

0.49

Correlation Coefficient

Katapult Holdings  Indie Semiconductor

Very weak diversification

The 3 months correlation between Katapult and Indie is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Katapult Holdings Equity and Indie Semiconductor Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indie Semiconductor 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 Equity are associated (or correlated) with Indie Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indie Semiconductor has no effect on the direction of Katapult Holdings i.e., Katapult Holdings and Indie Semiconductor go up and down completely randomly.

Pair Corralation between Katapult Holdings and Indie Semiconductor

If you would invest  0.60  in Katapult Holdings Equity on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Katapult Holdings Equity or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.56%
Values	Daily Returns

Katapult Holdings Equity  vs.  Indie Semiconductor Warrant

Katapult Holdings Equity

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Katapult Holdings Equity are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Katapult Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Indie Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indie Semiconductor Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Indie Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Katapult Holdings and Indie Semiconductor

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

The idea behind Katapult Holdings Equity and Indie Semiconductor Warrant 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.