Correlation Between KWESST Micro and Satellogic

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

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

Diversification Opportunities for KWESST Micro and Satellogic

-0.45

Correlation Coefficient

KWESST Micro  Satellogic

Very good diversification

The 3 months correlation between KWESST and Satellogic is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and Satellogic V in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satellogic V and KWESST Micro 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 KWESST Micro Systems are associated (or correlated) with Satellogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satellogic V has no effect on the direction of KWESST Micro i.e., KWESST Micro and Satellogic go up and down completely randomly.

Pair Corralation between KWESST Micro and Satellogic

Considering the 90-day investment horizon KWESST Micro Systems is expected to under-perform the Satellogic. In addition to that, KWESST Micro is 1.84 times more volatile than Satellogic V. It trades about -0.02 of its total potential returns per unit of risk. Satellogic V is currently generating about 0.27 per unit of volatility. If you would invest  105.00  in Satellogic V on September 13, 2024 and sell it today you would earn a total of  293.00  from holding Satellogic V or generate 279.05% return on investment over 90 days.

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

KWESST Micro Systems  vs.  Satellogic V

KWESST Micro Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KWESST Micro Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Satellogic V

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Satellogic V are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Satellogic disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KWESST Micro and Satellogic

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

The idea behind KWESST Micro Systems and Satellogic V 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.