Correlation Between Cetus Protocol and KMD

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

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

Diversification Opportunities for Cetus Protocol and KMD

0.05

Correlation Coefficient

Cetus Protocol  KMD

Significant diversification

The 3 months correlation between Cetus and KMD is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cetus Protocol and KMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMD and Cetus Protocol 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 Cetus Protocol are associated (or correlated) with KMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMD has no effect on the direction of Cetus Protocol i.e., Cetus Protocol and KMD go up and down completely randomly.

Pair Corralation between Cetus Protocol and KMD

Assuming the 90 days trading horizon Cetus Protocol is expected to generate 1.53 times more return on investment than KMD. However, Cetus Protocol is 1.53 times more volatile than KMD. It trades about 0.07 of its potential returns per unit of risk. KMD is currently generating about -0.07 per unit of risk. If you would invest  11.00  in Cetus Protocol on March 6, 2025 and sell it today you would earn a total of  2.00  from holding Cetus Protocol or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Cetus Protocol  vs.  KMD

Cetus Protocol

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cetus Protocol are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Cetus Protocol exhibited solid returns over the last few months and may actually be approaching a breakup point.

KMD

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cetus Protocol and KMD

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

The idea behind Cetus Protocol and KMD 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.