Correlation Between Legend Power and Kraken Robotics

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

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

Diversification Opportunities for Legend Power and Kraken Robotics

0.67

Correlation Coefficient

Legend Power  Kraken Robotics

Poor diversification

The 3 months correlation between Legend and Kraken is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Legend Power Systems and Kraken Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Robotics and Legend Power 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 Legend Power Systems are associated (or correlated) with Kraken Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Robotics has no effect on the direction of Legend Power i.e., Legend Power and Kraken Robotics go up and down completely randomly.

Pair Corralation between Legend Power and Kraken Robotics

Assuming the 90 days horizon Legend Power Systems is expected to under-perform the Kraken Robotics. In addition to that, Legend Power is 1.35 times more volatile than Kraken Robotics. It trades about -0.05 of its total potential returns per unit of risk. Kraken Robotics is currently generating about 0.01 per unit of volatility. If you would invest  258.00  in Kraken Robotics on December 21, 2024 and sell it today you would lose (3.00) from holding Kraken Robotics or give up 1.16% of portfolio value over 90 days.

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

Legend Power Systems  vs.  Kraken Robotics

Legend Power Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Legend Power Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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. In spite of fairly stable basic indicators, Kraken Robotics is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Legend Power and Kraken Robotics

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

The idea behind Legend Power Systems and Kraken Robotics 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.