Correlation Between Kaltura and Rave Restaurant

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

By analyzing existing cross correlation between Kaltura and Rave Restaurant Group, you can compare the effects of market volatilities on Kaltura and Rave Restaurant 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 Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaltura and Rave Restaurant.

Diversification Opportunities for Kaltura and Rave Restaurant

0.62

Correlation Coefficient

Kaltura  Rave Restaurant

Poor diversification

The 3 months correlation between Kaltura and Rave is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kaltura and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group 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 Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of Kaltura i.e., Kaltura and Rave Restaurant go up and down completely randomly.

Pair Corralation between Kaltura and Rave Restaurant

Given the investment horizon of 90 days Kaltura is expected to generate 1.29 times more return on investment than Rave Restaurant. However, Kaltura is 1.29 times more volatile than Rave Restaurant Group. It trades about 0.18 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.15 per unit of risk. If you would invest  201.00  in Kaltura on September 15, 2024 and sell it today you would earn a total of  24.00  from holding Kaltura or generate 11.94% return on investment over 90 days.

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

Kaltura  vs.  Rave Restaurant Group

Kaltura

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kaltura are ranked lower than 18 (%) 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.

Rave Restaurant Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Rave Restaurant exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaltura and Rave Restaurant

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

The idea behind Kaltura and Rave Restaurant Group 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.