Correlation Between Revelation Biosciences and Kaspien Holdings

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

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

Diversification Opportunities for Revelation Biosciences and Kaspien Holdings

0.7

Correlation Coefficient

Revelation Biosciences  Kaspien Holdings

Poor diversification

The 3 months correlation between Revelation and Kaspien is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Revelation Biosciences and Kaspien Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaspien Holdings and Revelation Biosciences 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 Revelation Biosciences are associated (or correlated) with Kaspien Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaspien Holdings has no effect on the direction of Revelation Biosciences i.e., Revelation Biosciences and Kaspien Holdings go up and down completely randomly.

Pair Corralation between Revelation Biosciences and Kaspien Holdings

Given the investment horizon of 90 days Revelation Biosciences is expected to under-perform the Kaspien Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Revelation Biosciences is 1.09 times less risky than Kaspien Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The Kaspien Holdings is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Kaspien Holdings on October 10, 2024 and sell it today you would lose (57.00) from holding Kaspien Holdings or give up 69.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	21.17%
Values	Daily Returns

Revelation Biosciences  vs.  Kaspien Holdings

Revelation Biosciences

Risk-Adjusted Performance

0 of 100

Weak

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

Kaspien Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Revelation Biosciences and Kaspien Holdings

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

The idea behind Revelation Biosciences and Kaspien Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.