Correlation Between Alkemy Capital and ONEOK

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

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

Diversification Opportunities for Alkemy Capital and ONEOK

0.71

Correlation Coefficient

Alkemy Capital  ONEOK

Poor diversification

The 3 months correlation between Alkemy and ONEOK is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alkemy Capital Investments and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Alkemy Capital 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 Alkemy Capital Investments are associated (or correlated) with ONEOK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONEOK Inc has no effect on the direction of Alkemy Capital i.e., Alkemy Capital and ONEOK go up and down completely randomly.

Pair Corralation between Alkemy Capital and ONEOK

Assuming the 90 days trading horizon Alkemy Capital Investments is expected to generate 2.13 times more return on investment than ONEOK. However, Alkemy Capital is 2.13 times more volatile than ONEOK Inc. It trades about 0.13 of its potential returns per unit of risk. ONEOK Inc is currently generating about -0.36 per unit of risk. If you would invest  11,750  in Alkemy Capital Investments on September 23, 2024 and sell it today you would earn a total of  1,250  from holding Alkemy Capital Investments or generate 10.64% return on investment over 90 days.

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

Alkemy Capital Investments  vs.  ONEOK Inc

Alkemy Capital Inves

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alkemy Capital Investments are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Alkemy Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

ONEOK Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ONEOK Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ONEOK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alkemy Capital and ONEOK

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

The idea behind Alkemy Capital Investments and ONEOK Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.