Correlation Between Kaltura and PacifiCorp

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

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

Diversification Opportunities for Kaltura and PacifiCorp

-0.16

Correlation Coefficient

Kaltura  PacifiCorp

Good diversification

The 3 months correlation between Kaltura and PacifiCorp is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kaltura and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp and Kaltura 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 Kaltura are associated (or correlated) with PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Kaltura i.e., Kaltura and PacifiCorp go up and down completely randomly.

Pair Corralation between Kaltura and PacifiCorp

Given the investment horizon of 90 days Kaltura is expected to generate 0.87 times more return on investment than PacifiCorp. However, Kaltura is 1.14 times less risky than PacifiCorp. It trades about 0.19 of its potential returns per unit of risk. PacifiCorp is currently generating about 0.14 per unit of risk. If you would invest  208.00  in Kaltura on September 12, 2024 and sell it today you would earn a total of  27.00  from holding Kaltura or generate 12.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Kaltura  vs.  PacifiCorp

Kaltura

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kaltura are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Kaltura reported solid returns over the last few months and may actually be approaching a breakup point.

PacifiCorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PacifiCorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, PacifiCorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kaltura and PacifiCorp

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

The idea behind Kaltura and PacifiCorp 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.