Correlation Between CELLULAR GOODS and Kinder Morgan

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

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

Diversification Opportunities for CELLULAR GOODS and Kinder Morgan

-0.24

Correlation Coefficient

CELLULAR GOODS  Kinder Morgan

Very good diversification

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

Pair Corralation between CELLULAR GOODS and Kinder Morgan

Assuming the 90 days horizon CELLULAR GOODS LS is expected to generate 54.33 times more return on investment than Kinder Morgan. However, CELLULAR GOODS is 54.33 times more volatile than Kinder Morgan. It trades about 0.12 of its potential returns per unit of risk. Kinder Morgan is currently generating about 0.09 per unit of risk. 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

CELLULAR GOODS LS  vs.  Kinder Morgan

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.

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.

Pair Trading with CELLULAR GOODS and Kinder Morgan

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

The idea behind CELLULAR GOODS LS and Kinder Morgan 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.