Correlation Between GREAT AJAX and KKR REAL

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

By analyzing existing cross correlation between GREAT AJAX P and KKR REAL ESTFINTR, you can compare the effects of market volatilities on GREAT AJAX and KKR REAL 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 GREAT AJAX with a short position of KKR REAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREAT AJAX and KKR REAL.

Diversification Opportunities for GREAT AJAX and KKR REAL

0.23

Correlation Coefficient

GREAT AJAX  KKR REAL

Modest diversification

The 3 months correlation between GREAT and KKR is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding GREAT AJAX P and KKR REAL ESTFINTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR REAL ESTFINTR and GREAT AJAX 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 GREAT AJAX P are associated (or correlated) with KKR REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR REAL ESTFINTR has no effect on the direction of GREAT AJAX i.e., GREAT AJAX and KKR REAL go up and down completely randomly.

Pair Corralation between GREAT AJAX and KKR REAL

Assuming the 90 days horizon GREAT AJAX P is expected to generate 1.16 times more return on investment than KKR REAL. However, GREAT AJAX is 1.16 times more volatile than KKR REAL ESTFINTR. It trades about -0.06 of its potential returns per unit of risk. KKR REAL ESTFINTR is currently generating about -0.18 per unit of risk. If you would invest  282.00  in GREAT AJAX P on October 11, 2024 and sell it today you would lose (8.00) from holding GREAT AJAX P or give up 2.84% of portfolio value over 90 days.

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

GREAT AJAX P  vs.  KKR REAL ESTFINTR

GREAT AJAX P

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GREAT AJAX P are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GREAT AJAX may actually be approaching a critical reversion point that can send shares even higher in February 2025.

KKR REAL ESTFINTR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GREAT AJAX and KKR REAL

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

The idea behind GREAT AJAX P and KKR REAL ESTFINTR 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.