Correlation Between Kinder Morgan and CELLULAR GOODS

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

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

Diversification Opportunities for Kinder Morgan and CELLULAR GOODS

-0.24

Correlation Coefficient

Kinder Morgan  CELLULAR GOODS

Very good diversification

The 3 months correlation between Kinder and CELLULAR is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and CELLULAR GOODS LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CELLULAR GOODS LS and Kinder Morgan 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 Kinder Morgan are associated (or correlated) with CELLULAR GOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CELLULAR GOODS LS has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and CELLULAR GOODS go up and down completely randomly.

Pair Corralation between Kinder Morgan and CELLULAR GOODS

Assuming the 90 days horizon Kinder Morgan is expected to generate 74.6 times less return on investment than CELLULAR GOODS. But when comparing it to its historical volatility, Kinder Morgan is 54.33 times less risky than CELLULAR GOODS. It trades about 0.09 of its potential returns per unit of risk. CELLULAR GOODS LS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.10  in CELLULAR GOODS LS on October 4, 2024 and sell it today you would lose (0.05) from holding CELLULAR GOODS LS or give up 50.0% of portfolio value over 90 days.

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

Kinder Morgan  vs.  CELLULAR GOODS LS

Kinder Morgan

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinder Morgan are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kinder Morgan reported solid returns over the last few months and may actually be approaching a breakup point.

CELLULAR GOODS LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CELLULAR GOODS LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CELLULAR GOODS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kinder Morgan and CELLULAR GOODS

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

The idea behind Kinder Morgan and CELLULAR GOODS LS 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.