Correlation Between Altria and Kaival Brands

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

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

Diversification Opportunities for Altria and Kaival Brands

-0.5

Correlation Coefficient

Altria  Kaival Brands

Very good diversification

The 3 months correlation between Altria and Kaival is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Kaival Brands Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaival Brands Innovations and Altria 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 Altria Group are associated (or correlated) with Kaival Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaival Brands Innovations has no effect on the direction of Altria i.e., Altria and Kaival Brands go up and down completely randomly.

Pair Corralation between Altria and Kaival Brands

Allowing for the 90-day total investment horizon Altria Group is expected to under-perform the Kaival Brands. But the stock apears to be less risky and, when comparing its historical volatility, Altria Group is 4.86 times less risky than Kaival Brands. The stock trades about -0.18 of its potential returns per unit of risk. The Kaival Brands Innovations is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Kaival Brands Innovations on September 22, 2024 and sell it today you would lose (2.00) from holding Kaival Brands Innovations or give up 2.5% of portfolio value over 90 days.

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

Altria Group  vs.  Kaival Brands Innovations

Altria Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Altria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Kaival Brands Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Altria and Kaival Brands

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

The idea behind Altria Group and Kaival Brands Innovations 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..