Correlation Between KIM KINDEX and Solution Advanced

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

By analyzing existing cross correlation between KIM KINDEX 200TotalReturn and Solution Advanced Technology, you can compare the effects of market volatilities on KIM KINDEX and Solution Advanced 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 KIM KINDEX with a short position of Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIM KINDEX and Solution Advanced.

Diversification Opportunities for KIM KINDEX and Solution Advanced

0.74

Correlation Coefficient

KIM KINDEX  Solution Advanced

Poor diversification

The 3 months correlation between KIM and Solution is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding KIM KINDEX 200TotalReturn and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced and KIM KINDEX 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 KIM KINDEX 200TotalReturn are associated (or correlated) with Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of KIM KINDEX i.e., KIM KINDEX and Solution Advanced go up and down completely randomly.

Pair Corralation between KIM KINDEX and Solution Advanced

Assuming the 90 days trading horizon KIM KINDEX 200TotalReturn is expected to generate 0.34 times more return on investment than Solution Advanced. However, KIM KINDEX 200TotalReturn is 2.92 times less risky than Solution Advanced. It trades about -0.06 of its potential returns per unit of risk. Solution Advanced Technology is currently generating about -0.1 per unit of risk. If you would invest  2,123,000  in KIM KINDEX 200TotalReturn on October 6, 2024 and sell it today you would lose (33,000) from holding KIM KINDEX 200TotalReturn or give up 1.55% of portfolio value over 90 days.

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

KIM KINDEX 200TotalReturn  vs.  Solution Advanced Technology

KIM KINDEX 200TotalReturn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIM KINDEX 200TotalReturn has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Solution Advanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solution Advanced Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KIM KINDEX and Solution Advanced

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

The idea behind KIM KINDEX 200TotalReturn and Solution Advanced Technology 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.