Correlation Between Ready Capital and Kairous Acquisition

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

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

Diversification Opportunities for Ready Capital and Kairous Acquisition

0.08

Correlation Coefficient

Ready Capital  Kairous Acquisition

Significant diversification

The 3 months correlation between Ready and Kairous is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Kairous Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kairous Acquisition Corp and Ready Capital 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 Ready Capital Corp are associated (or correlated) with Kairous Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kairous Acquisition Corp has no effect on the direction of Ready Capital i.e., Ready Capital and Kairous Acquisition go up and down completely randomly.

Pair Corralation between Ready Capital and Kairous Acquisition

Allowing for the 90-day total investment horizon Ready Capital is expected to generate 108.67 times less return on investment than Kairous Acquisition. But when comparing it to its historical volatility, Ready Capital Corp is 9.11 times less risky than Kairous Acquisition. It trades about 0.0 of its potential returns per unit of risk. Kairous Acquisition Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9.01  in Kairous Acquisition Corp on September 16, 2024 and sell it today you would lose (2.00) from holding Kairous Acquisition Corp or give up 22.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.08%
Values	Daily Returns

Ready Capital Corp  vs.  Kairous Acquisition Corp

Ready Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ready Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ready Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kairous Acquisition Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kairous Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal essential indicators, Kairous Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ready Capital and Kairous Acquisition

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

The idea behind Ready Capital Corp and Kairous Acquisition Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.