Correlation Between Kraken Robotics and African Discovery

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

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

Diversification Opportunities for Kraken Robotics and African Discovery

0.26

Correlation Coefficient

Kraken Robotics  African Discovery

Modest diversification

The 3 months correlation between Kraken and African is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kraken Robotics and African Discovery Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Discovery and Kraken Robotics 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 Kraken Robotics are associated (or correlated) with African Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Discovery has no effect on the direction of Kraken Robotics i.e., Kraken Robotics and African Discovery go up and down completely randomly.

Pair Corralation between Kraken Robotics and African Discovery

Assuming the 90 days horizon Kraken Robotics is expected to under-perform the African Discovery. But the otc stock apears to be less risky and, when comparing its historical volatility, Kraken Robotics is 3.4 times less risky than African Discovery. The otc stock trades about 0.0 of its potential returns per unit of risk. The African Discovery Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.40  in African Discovery Group on December 2, 2024 and sell it today you would earn a total of  0.50  from holding African Discovery Group or generate 125.0% return on investment over 90 days.

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

Kraken Robotics  vs.  African Discovery Group

Kraken Robotics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kraken Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kraken Robotics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

African Discovery

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in African Discovery Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, African Discovery reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kraken Robotics and African Discovery

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

The idea behind Kraken Robotics and African Discovery Group 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.