Correlation Between Katipult Technology and Tesla

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

By analyzing existing cross correlation between Katipult Technology Corp and Tesla Inc CDR, you can compare the effects of market volatilities on Katipult Technology and Tesla 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 Katipult Technology with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Katipult Technology and Tesla.

Diversification Opportunities for Katipult Technology and Tesla

-0.61

Correlation Coefficient

Katipult Technology  Tesla

Excellent diversification

The 3 months correlation between Katipult and Tesla is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Katipult Technology Corp and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR and Katipult Technology 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 Katipult Technology Corp are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc CDR has no effect on the direction of Katipult Technology i.e., Katipult Technology and Tesla go up and down completely randomly.

Pair Corralation between Katipult Technology and Tesla

Assuming the 90 days trading horizon Katipult Technology Corp is expected to generate 3.92 times more return on investment than Tesla. However, Katipult Technology is 3.92 times more volatile than Tesla Inc CDR. It trades about 0.05 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about 0.19 per unit of risk. If you would invest  1.50  in Katipult Technology Corp on September 3, 2024 and sell it today you would lose (0.50) from holding Katipult Technology Corp or give up 33.33% of portfolio value over 90 days.

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

Katipult Technology Corp  vs.  Tesla Inc CDR

Katipult Technology Corp

Risk-Adjusted Performance

3 of 100

Insignificant

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

Tesla Inc CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Tesla exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Katipult Technology and Tesla

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

The idea behind Katipult Technology Corp and Tesla Inc CDR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.