Correlation Between Kraken Energy and Stelmine Canada

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

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

Diversification Opportunities for Kraken Energy and Stelmine Canada

0.47

Correlation Coefficient

Kraken Energy  Stelmine Canada

Very weak diversification

The 3 months correlation between Kraken and Stelmine is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kraken Energy Corp and Stelmine Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelmine Canada and Kraken Energy 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 Energy Corp are associated (or correlated) with Stelmine Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelmine Canada has no effect on the direction of Kraken Energy i.e., Kraken Energy and Stelmine Canada go up and down completely randomly.

Pair Corralation between Kraken Energy and Stelmine Canada

Assuming the 90 days horizon Kraken Energy Corp is expected to under-perform the Stelmine Canada. But the otc stock apears to be less risky and, when comparing its historical volatility, Kraken Energy Corp is 1.36 times less risky than Stelmine Canada. The otc stock trades about -0.08 of its potential returns per unit of risk. The Stelmine Canada is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1.40  in Stelmine Canada on September 11, 2024 and sell it today you would lose (0.90) from holding Stelmine Canada or give up 64.29% of portfolio value over 90 days.

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

Kraken Energy Corp  vs.  Stelmine Canada

Kraken Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kraken Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Stelmine Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stelmine Canada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Kraken Energy and Stelmine Canada

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

The idea behind Kraken Energy Corp and Stelmine Canada 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.