Correlation Between Blueriver Acquisition and KAT Exploration

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

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

Diversification Opportunities for Blueriver Acquisition and KAT Exploration

0.71

Correlation Coefficient

Blueriver Acquisition  KAT Exploration

Poor diversification

The 3 months correlation between Blueriver and KAT is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Blueriver Acquisition Corp and KAT Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAT Exploration and Blueriver Acquisition 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 Blueriver Acquisition Corp 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 Blueriver Acquisition i.e., Blueriver Acquisition and KAT Exploration go up and down completely randomly.

Pair Corralation between Blueriver Acquisition and KAT Exploration

If you would invest  0.03  in KAT Exploration on September 18, 2024 and sell it today you would lose (0.01) from holding KAT Exploration or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

Blueriver Acquisition Corp  vs.  KAT Exploration

Blueriver Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blueriver Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Blueriver Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

KAT Exploration

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KAT Exploration are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, KAT Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blueriver Acquisition and KAT Exploration

The main advantage of trading using opposite Blueriver Acquisition and KAT Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blueriver Acquisition 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 Blueriver Acquisition Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.