Correlation Between Supurva Healthcare and KAT Exploration

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

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

Diversification Opportunities for Supurva Healthcare and KAT Exploration

-0.27

Correlation Coefficient

Supurva Healthcare  KAT Exploration

Very good diversification

The 3 months correlation between Supurva and KAT is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Supurva Healthcare Group and KAT Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAT Exploration and Supurva Healthcare 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 Supurva Healthcare Group are associated (or correlated) with KAT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAT Exploration has no effect on the direction of Supurva Healthcare i.e., Supurva Healthcare and KAT Exploration go up and down completely randomly.

Pair Corralation between Supurva Healthcare and KAT Exploration

Given the investment horizon of 90 days Supurva Healthcare is expected to generate 7.37 times less return on investment than KAT Exploration. But when comparing it to its historical volatility, Supurva Healthcare Group is 1.71 times less risky than KAT Exploration. It trades about 0.06 of its potential returns per unit of risk. KAT Exploration is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  0.02  in KAT Exploration on October 20, 2024 and sell it today you would earn a total of  0.02  from holding KAT Exploration or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Supurva Healthcare Group  vs.  KAT Exploration

Supurva Healthcare

Risk-Adjusted Performance

13 of 100

Good

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

KAT Exploration

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KAT Exploration are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, KAT Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Supurva Healthcare and KAT Exploration

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

The idea behind Supurva Healthcare Group and KAT Exploration 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.