Correlation Between Khosla Ventures and Fat Projects

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

By analyzing existing cross correlation between Khosla Ventures Acquisition and Fat Projects Acquisition, you can compare the effects of market volatilities on Khosla Ventures and Fat Projects 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 Khosla Ventures with a short position of Fat Projects. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khosla Ventures and Fat Projects.

Diversification Opportunities for Khosla Ventures and Fat Projects

0.45

Correlation Coefficient

Khosla Ventures  Fat Projects

Very weak diversification

The 3 months correlation between Khosla and Fat is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Khosla Ventures Acquisition and Fat Projects Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fat Projects Acquisition and Khosla Ventures 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 Khosla Ventures Acquisition are associated (or correlated) with Fat Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fat Projects Acquisition has no effect on the direction of Khosla Ventures i.e., Khosla Ventures and Fat Projects go up and down completely randomly.

Pair Corralation between Khosla Ventures and Fat Projects

Given the investment horizon of 90 days Khosla Ventures is expected to generate 1.12 times less return on investment than Fat Projects. But when comparing it to its historical volatility, Khosla Ventures Acquisition is 1.92 times less risky than Fat Projects. It trades about 0.13 of its potential returns per unit of risk. Fat Projects Acquisition is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,028  in Fat Projects Acquisition on October 11, 2024 and sell it today you would earn a total of  61.00  from holding Fat Projects Acquisition or generate 5.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

Khosla Ventures Acquisition  vs.  Fat Projects Acquisition

Khosla Ventures Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Khosla Ventures Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Khosla Ventures is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Fat Projects Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fat Projects Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fat Projects is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Khosla Ventures and Fat Projects

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

The idea behind Khosla Ventures Acquisition and Fat Projects Acquisition 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 Stocks Directory module to find actively traded stocks across global markets.