Correlation Between LUMENT FINANCE and KKR REAL

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

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

Diversification Opportunities for LUMENT FINANCE and KKR REAL

-0.6

Correlation Coefficient

LUMENT FINANCE  KKR REAL

Excellent diversification

The 3 months correlation between LUMENT and KKR is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding LUMENT FINANCE TR 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 LUMENT FINANCE 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 LUMENT FINANCE TR 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 LUMENT FINANCE i.e., LUMENT FINANCE and KKR REAL go up and down completely randomly.

Pair Corralation between LUMENT FINANCE and KKR REAL

Assuming the 90 days horizon LUMENT FINANCE TR is expected to generate 1.61 times more return on investment than KKR REAL. However, LUMENT FINANCE is 1.61 times more volatile than KKR REAL ESTFINTR. It trades about 0.08 of its potential returns per unit of risk. KKR REAL ESTFINTR is currently generating about -0.05 per unit of risk. If you would invest  220.00  in LUMENT FINANCE TR on October 26, 2024 and sell it today you would earn a total of  24.00  from holding LUMENT FINANCE TR or generate 10.91% return on investment over 90 days.

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

LUMENT FINANCE TR  vs.  KKR REAL ESTFINTR

LUMENT FINANCE TR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LUMENT FINANCE TR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LUMENT FINANCE reported solid returns over the last few months and may actually be approaching a breakup point.

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 LUMENT FINANCE and KKR REAL

The main advantage of trading using opposite LUMENT FINANCE and KKR REAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LUMENT FINANCE 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 LUMENT FINANCE TR 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.