Correlation Between Karat Packaging and Micromobility

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

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

Diversification Opportunities for Karat Packaging and Micromobility

-0.81

Correlation Coefficient

Karat Packaging  Micromobility

Pay attention - limited upside

The 3 months correlation between Karat and Micromobility is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Karat Packaging and Micromobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micromobility 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 Micromobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micromobility has no effect on the direction of Karat Packaging i.e., Karat Packaging and Micromobility go up and down completely randomly.

Pair Corralation between Karat Packaging and Micromobility

If you would invest  2,553  in Karat Packaging on September 28, 2024 and sell it today you would earn a total of  518.00  from holding Karat Packaging or generate 20.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.61%
Values	Daily Returns

Karat Packaging  vs.  Micromobility

Karat Packaging

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Karat Packaging are ranked lower than 13 (%) 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.

Micromobility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micromobility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Micromobility is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Karat Packaging and Micromobility

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

The idea behind Karat Packaging and Micromobility 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.