Correlation Between Alderan Resources and Kinatico

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

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

Diversification Opportunities for Alderan Resources and Kinatico

-0.56

Correlation Coefficient

Alderan Resources  Kinatico

Excellent diversification

The 3 months correlation between Alderan and Kinatico is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alderan Resources and Kinatico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinatico and Alderan Resources 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 Alderan Resources are associated (or correlated) with Kinatico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinatico has no effect on the direction of Alderan Resources i.e., Alderan Resources and Kinatico go up and down completely randomly.

Pair Corralation between Alderan Resources and Kinatico

Assuming the 90 days trading horizon Alderan Resources is expected to generate 2.87 times more return on investment than Kinatico. However, Alderan Resources is 2.87 times more volatile than Kinatico. It trades about 0.03 of its potential returns per unit of risk. Kinatico is currently generating about 0.04 per unit of risk. If you would invest  5.78  in Alderan Resources on October 22, 2024 and sell it today you would lose (3.48) from holding Alderan Resources or give up 60.21% of portfolio value over 90 days.

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

Alderan Resources  vs.  Kinatico

Alderan Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alderan Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alderan Resources is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Kinatico

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinatico are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kinatico unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alderan Resources and Kinatico

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

The idea behind Alderan Resources and Kinatico 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.