Correlation Between Kraken Robotics and Cepton

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

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

Diversification Opportunities for Kraken Robotics and Cepton

0.51

Correlation Coefficient

Kraken Robotics  Cepton

Very weak diversification

The 3 months correlation between Kraken and Cepton is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kraken Robotics and Cepton Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cepton Inc and Kraken Robotics 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 Kraken Robotics are associated (or correlated) with Cepton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cepton Inc has no effect on the direction of Kraken Robotics i.e., Kraken Robotics and Cepton go up and down completely randomly.

Pair Corralation between Kraken Robotics and Cepton

Assuming the 90 days horizon Kraken Robotics is expected to generate 11.22 times more return on investment than Cepton. However, Kraken Robotics is 11.22 times more volatile than Cepton Inc. It trades about 0.2 of its potential returns per unit of risk. Cepton Inc is currently generating about 0.2 per unit of risk. If you would invest  162.00  in Kraken Robotics on September 14, 2024 and sell it today you would earn a total of  33.00  from holding Kraken Robotics or generate 20.37% return on investment over 90 days.

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

Kraken Robotics  vs.  Cepton Inc

Kraken Robotics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kraken Robotics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Kraken Robotics reported solid returns over the last few months and may actually be approaching a breakup point.

Cepton Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cepton Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cepton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kraken Robotics and Cepton

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

The idea behind Kraken Robotics and Cepton Inc 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.