Correlation Between Karat Packaging and Ball

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

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

Diversification Opportunities for Karat Packaging and Ball

-0.72

Correlation Coefficient

Karat Packaging  Ball

Pay attention - limited upside

The 3 months correlation between Karat and Ball is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Karat Packaging and Ball Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ball and Karat Packaging 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 Karat Packaging are associated (or correlated) with Ball. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ball has no effect on the direction of Karat Packaging i.e., Karat Packaging and Ball go up and down completely randomly.

Pair Corralation between Karat Packaging and Ball

Considering the 90-day investment horizon Karat Packaging is expected to generate 1.46 times more return on investment than Ball. However, Karat Packaging is 1.46 times more volatile than Ball Corporation. It trades about 0.08 of its potential returns per unit of risk. Ball Corporation is currently generating about 0.01 per unit of risk. If you would invest  1,340  in Karat Packaging on October 4, 2024 and sell it today you would earn a total of  1,644  from holding Karat Packaging or generate 122.69% return on investment over 90 days.

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

Karat Packaging  vs.  Ball Corp.

Karat Packaging

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Karat Packaging are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Karat Packaging unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ball

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ball Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Karat Packaging and Ball

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

The idea behind Karat Packaging and Ball Corporation 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.