Correlation Between Katapult Holdings and Take Two

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

By analyzing existing cross correlation between Katapult Holdings Equity and Take Two Interactive Software, you can compare the effects of market volatilities on Katapult Holdings and Take Two 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 Katapult Holdings with a short position of Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of Katapult Holdings and Take Two.

Diversification Opportunities for Katapult Holdings and Take Two

-0.2

Correlation Coefficient

Katapult Holdings  Take Two

Good diversification

The 3 months correlation between Katapult and Take is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Katapult Holdings Equity and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive and Katapult Holdings 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 Katapult Holdings Equity are associated (or correlated) with Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Katapult Holdings i.e., Katapult Holdings and Take Two go up and down completely randomly.

Pair Corralation between Katapult Holdings and Take Two

Assuming the 90 days horizon Katapult Holdings Equity is expected to generate 8.98 times more return on investment than Take Two. However, Katapult Holdings is 8.98 times more volatile than Take Two Interactive Software. It trades about 0.04 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.04 per unit of risk. If you would invest  0.57  in Katapult Holdings Equity on July 14, 2024 and sell it today you would lose (0.02) from holding Katapult Holdings Equity or give up 3.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

Katapult Holdings Equity  vs.  Take Two Interactive Software

Katapult Holdings Equity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Katapult Holdings Equity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Katapult Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Take Two Interactive

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Take Two is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Katapult Holdings and Take Two

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

The idea behind Katapult Holdings Equity and Take Two Interactive Software 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.