Correlation Between Simply Better and Kraken Robotics

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

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

Diversification Opportunities for Simply Better and Kraken Robotics

0.69

Correlation Coefficient

Simply Better  Kraken Robotics

Poor diversification

The 3 months correlation between Simply and Kraken is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Simply Better Brands and Kraken Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Robotics and Simply Better 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 Simply Better Brands 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 Simply Better i.e., Simply Better and Kraken Robotics go up and down completely randomly.

Pair Corralation between Simply Better and Kraken Robotics

Assuming the 90 days trading horizon Simply Better Brands is expected to generate 1.48 times more return on investment than Kraken Robotics. However, Simply Better is 1.48 times more volatile than Kraken Robotics. It trades about 0.08 of its potential returns per unit of risk. Kraken Robotics is currently generating about 0.1 per unit of risk. If you would invest  23.00  in Simply Better Brands on September 19, 2024 and sell it today you would earn a total of  78.00  from holding Simply Better Brands or generate 339.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Simply Better Brands  vs.  Kraken Robotics

Simply Better Brands

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simply Better Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Simply Better showed solid returns over the last few months and may actually be approaching a breakup point.

Kraken Robotics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kraken Robotics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kraken Robotics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simply Better and Kraken Robotics

The main advantage of trading using opposite Simply Better and Kraken Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply Better 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 Simply Better Brands 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.