Correlation Between Kraken Energy and Namibia Critical

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

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

Diversification Opportunities for Kraken Energy and Namibia Critical

0.51

Correlation Coefficient

Kraken Energy  Namibia Critical

Very weak diversification

The 3 months correlation between Kraken and Namibia is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kraken Energy Corp and Namibia Critical Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namibia Critical Metals and Kraken Energy 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 Kraken Energy Corp are associated (or correlated) with Namibia Critical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namibia Critical Metals has no effect on the direction of Kraken Energy i.e., Kraken Energy and Namibia Critical go up and down completely randomly.

Pair Corralation between Kraken Energy and Namibia Critical

Assuming the 90 days horizon Kraken Energy Corp is expected to under-perform the Namibia Critical. In addition to that, Kraken Energy is 1.05 times more volatile than Namibia Critical Metals. It trades about -0.04 of its total potential returns per unit of risk. Namibia Critical Metals is currently generating about 0.01 per unit of volatility. If you would invest  4.00  in Namibia Critical Metals on September 4, 2024 and sell it today you would lose (2.00) from holding Namibia Critical Metals or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Kraken Energy Corp  vs.  Namibia Critical Metals

Kraken Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Namibia Critical Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Namibia Critical Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Namibia Critical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kraken Energy and Namibia Critical

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

The idea behind Kraken Energy Corp and Namibia Critical Metals 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.