Correlation Between Aave and KAITO

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Aave and KAITO 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 Aave and KAITO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aave and KAITO, you can compare the effects of market volatilities on Aave and KAITO 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 Aave with a short position of KAITO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aave and KAITO.

Diversification Opportunities for Aave and KAITO

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aave and KAITO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aave and KAITO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAITO and Aave 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 Aave are associated (or correlated) with KAITO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAITO has no effect on the direction of Aave i.e., Aave and KAITO go up and down completely randomly.

Pair Corralation between Aave and KAITO

Assuming the 90 days trading horizon Aave is expected to generate 0.88 times more return on investment than KAITO. However, Aave is 1.14 times less risky than KAITO. It trades about 0.25 of its potential returns per unit of risk. KAITO is currently generating about 0.19 per unit of risk. If you would invest  25,909  in Aave on April 18, 2025 and sell it today you would earn a total of  6,384  from holding Aave or generate 24.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aave  vs.  KAITO

 Performance 
       Timeline  
Aave 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Aave are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Aave exhibited solid returns over the last few months and may actually be approaching a breakup point.
KAITO 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in KAITO are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, KAITO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aave and KAITO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aave and KAITO

The main advantage of trading using opposite Aave and KAITO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave position performs unexpectedly, KAITO 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 KAITO will offset losses from the drop in KAITO's long position.
The idea behind Aave and KAITO 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

Other Complementary Tools

Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets