Correlation Between Kraken Energy and StrikePoint Gold

Can any of the company-specific risk be diversified away by investing in both Kraken Energy and StrikePoint Gold 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 StrikePoint Gold 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 StrikePoint Gold, you can compare the effects of market volatilities on Kraken Energy and StrikePoint Gold 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 StrikePoint Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraken Energy and StrikePoint Gold.

Diversification Opportunities for Kraken Energy and StrikePoint Gold

0.35

Correlation Coefficient

Kraken Energy  StrikePoint Gold

Weak diversification

The 3 months correlation between Kraken and StrikePoint is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kraken Energy Corp and StrikePoint Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StrikePoint Gold 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 StrikePoint Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StrikePoint Gold has no effect on the direction of Kraken Energy i.e., Kraken Energy and StrikePoint Gold go up and down completely randomly.

Pair Corralation between Kraken Energy and StrikePoint Gold

Assuming the 90 days horizon Kraken Energy Corp is expected to generate 0.63 times more return on investment than StrikePoint Gold. However, Kraken Energy Corp is 1.6 times less risky than StrikePoint Gold. It trades about -0.17 of its potential returns per unit of risk. StrikePoint Gold is currently generating about -0.16 per unit of risk. If you would invest  2.77  in Kraken Energy Corp on September 12, 2024 and sell it today you would lose (0.95) from holding Kraken Energy Corp or give up 34.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kraken Energy Corp  vs.  StrikePoint Gold

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

StrikePoint Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kraken Energy and StrikePoint Gold

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

The idea behind Kraken Energy Corp and StrikePoint Gold 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.