Correlation Between Wallbridge Mining and Kraken Energy

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

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

Diversification Opportunities for Wallbridge Mining and Kraken Energy

0.66

Correlation Coefficient

Wallbridge Mining  Kraken Energy

Poor diversification

The 3 months correlation between Wallbridge and Kraken is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Wallbridge Mining and Kraken Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Energy Corp and Wallbridge Mining 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 Wallbridge Mining are associated (or correlated) with Kraken Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Energy Corp has no effect on the direction of Wallbridge Mining i.e., Wallbridge Mining and Kraken Energy go up and down completely randomly.

Pair Corralation between Wallbridge Mining and Kraken Energy

Assuming the 90 days horizon Wallbridge Mining is expected to generate 0.78 times more return on investment than Kraken Energy. However, Wallbridge Mining is 1.27 times less risky than Kraken Energy. It trades about 0.0 of its potential returns per unit of risk. Kraken Energy Corp is currently generating about -0.09 per unit of risk. If you would invest  5.00  in Wallbridge Mining on September 12, 2024 and sell it today you would lose (0.80) from holding Wallbridge Mining or give up 16.0% of portfolio value over 90 days.

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

Wallbridge Mining  vs.  Kraken Energy Corp

Wallbridge Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Wallbridge Mining and Kraken Energy

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

The idea behind Wallbridge Mining and Kraken Energy Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.