Correlation Between Karat Packaging and DSS

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

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

Diversification Opportunities for Karat Packaging and DSS

-0.8

Correlation Coefficient

Karat Packaging  DSS

Pay attention - limited upside

The 3 months correlation between Karat and DSS is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Karat Packaging and DSS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSS Inc and Karat Packaging 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 Karat Packaging are associated (or correlated) with DSS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSS Inc has no effect on the direction of Karat Packaging i.e., Karat Packaging and DSS go up and down completely randomly.

Pair Corralation between Karat Packaging and DSS

Considering the 90-day investment horizon Karat Packaging is expected to generate 0.39 times more return on investment than DSS. However, Karat Packaging is 2.57 times less risky than DSS. It trades about 0.26 of its potential returns per unit of risk. DSS Inc is currently generating about -0.13 per unit of risk. If you would invest  2,390  in Karat Packaging on September 5, 2024 and sell it today you would earn a total of  747.00  from holding Karat Packaging or generate 31.26% return on investment over 90 days.

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

Karat Packaging  vs.  DSS Inc

Karat Packaging

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Karat Packaging are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Karat Packaging unveiled solid returns over the last few months and may actually be approaching a breakup point.

DSS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Karat Packaging and DSS

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

The idea behind Karat Packaging and DSS 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.