Correlation Between KRAFT and Space-Communication

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

By analyzing existing cross correlation between KRAFT FOODS INC and Space Communication, you can compare the effects of market volatilities on KRAFT and Space-Communication 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 KRAFT with a short position of Space-Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRAFT and Space-Communication.

Diversification Opportunities for KRAFT and Space-Communication

0.0

Correlation Coefficient

KRAFT  Space-Communication

Pay attention - limited upside

The 3 months correlation between KRAFT and Space-Communication is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KRAFT FOODS INC and Space Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Space Communication and KRAFT 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 KRAFT FOODS INC are associated (or correlated) with Space-Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Space Communication has no effect on the direction of KRAFT i.e., KRAFT and Space-Communication go up and down completely randomly.

Pair Corralation between KRAFT and Space-Communication

Assuming the 90 days trading horizon KRAFT FOODS INC is expected to generate 0.5 times more return on investment than Space-Communication. However, KRAFT FOODS INC is 2.0 times less risky than Space-Communication. It trades about -0.01 of its potential returns per unit of risk. Space Communication is currently generating about -0.04 per unit of risk. If you would invest  11,515  in KRAFT FOODS INC on October 26, 2024 and sell it today you would lose (448.00) from holding KRAFT FOODS INC or give up 3.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	21.73%
Values	Daily Returns

KRAFT FOODS INC  vs.  Space Communication

KRAFT FOODS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRAFT FOODS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for KRAFT FOODS INC investors.

Space Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Space Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Space-Communication is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KRAFT and Space-Communication

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

The idea behind KRAFT FOODS INC and Space Communication 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.