Correlation Between VARIOUS EATERIES and KKR Co

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

By analyzing existing cross correlation between VARIOUS EATERIES LS and KKR Co LP, you can compare the effects of market volatilities on VARIOUS EATERIES and KKR Co 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 VARIOUS EATERIES with a short position of KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and KKR Co.

Diversification Opportunities for VARIOUS EATERIES and KKR Co

0.63

Correlation Coefficient

VARIOUS EATERIES  KKR Co

Poor diversification

The 3 months correlation between VARIOUS and KKR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP and VARIOUS EATERIES 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 VARIOUS EATERIES LS are associated (or correlated) with KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of VARIOUS EATERIES i.e., VARIOUS EATERIES and KKR Co go up and down completely randomly.

Pair Corralation between VARIOUS EATERIES and KKR Co

Assuming the 90 days horizon VARIOUS EATERIES LS is expected to under-perform the KKR Co. In addition to that, VARIOUS EATERIES is 1.2 times more volatile than KKR Co LP. It trades about -0.03 of its total potential returns per unit of risk. KKR Co LP is currently generating about 0.13 per unit of volatility. If you would invest  4,475  in KKR Co LP on September 3, 2024 and sell it today you would earn a total of  10,823  from holding KKR Co LP or generate 241.85% return on investment over 90 days.

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

VARIOUS EATERIES LS  vs.  KKR Co LP

VARIOUS EATERIES

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VARIOUS EATERIES LS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VARIOUS EATERIES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KKR Co LP

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KKR Co reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VARIOUS EATERIES and KKR Co

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

The idea behind VARIOUS EATERIES LS and KKR Co LP 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.