Correlation Between Ramp Metals and KDA

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

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

Diversification Opportunities for Ramp Metals and KDA

-0.22

Correlation Coefficient

Ramp Metals  KDA

Very good diversification

The 3 months correlation between Ramp and KDA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ramp Metals and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group and Ramp Metals 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 Ramp Metals are associated (or correlated) with KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Ramp Metals i.e., Ramp Metals and KDA go up and down completely randomly.

Pair Corralation between Ramp Metals and KDA

Assuming the 90 days trading horizon Ramp Metals is expected to generate 1.38 times more return on investment than KDA. However, Ramp Metals is 1.38 times more volatile than KDA Group. It trades about 0.28 of its potential returns per unit of risk. KDA Group is currently generating about 0.14 per unit of risk. If you would invest  72.00  in Ramp Metals on October 8, 2024 and sell it today you would earn a total of  17.00  from holding Ramp Metals or generate 23.61% return on investment over 90 days.

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

Ramp Metals  vs.  KDA Group

Ramp Metals

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ramp Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Ramp Metals showed solid returns over the last few months and may actually be approaching a breakup point.

KDA Group

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days KDA Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, KDA is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ramp Metals and KDA

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

The idea behind Ramp Metals and KDA Group 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.