Correlation Between ANZ Group and Kinatico

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

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

Diversification Opportunities for ANZ Group and Kinatico

0.44

Correlation Coefficient

ANZ Group  Kinatico

Very weak diversification

The 3 months correlation between ANZ and Kinatico is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and Kinatico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinatico and ANZ Group 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 ANZ Group Holdings 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 ANZ Group i.e., ANZ Group and Kinatico go up and down completely randomly.

Pair Corralation between ANZ Group and Kinatico

Assuming the 90 days trading horizon ANZ Group is expected to generate 16.24 times less return on investment than Kinatico. But when comparing it to its historical volatility, ANZ Group Holdings is 6.82 times less risky than Kinatico. It trades about 0.03 of its potential returns per unit of risk. Kinatico is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Kinatico on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Kinatico or generate 16.67% return on investment over 90 days.

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

ANZ Group Holdings  vs.  Kinatico

ANZ Group Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ANZ Group Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ANZ Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Kinatico

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinatico are ranked lower than 5 (%) 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 ANZ Group and Kinatico

The main advantage of trading using opposite ANZ Group and Kinatico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANZ Group 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 ANZ Group Holdings 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.