Correlation Between Aquagold International and Kinetics Small

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

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

Diversification Opportunities for Aquagold International and Kinetics Small

-0.24

Correlation Coefficient

Aquagold International  Kinetics Small

Very good diversification

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

Pair Corralation between Aquagold International and Kinetics Small

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Kinetics Small. In addition to that, Aquagold International is 3.01 times more volatile than Kinetics Small Cap. It trades about -0.12 of its total potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.05 per unit of volatility. If you would invest  17,889  in Kinetics Small Cap on December 22, 2024 and sell it today you would earn a total of  855.00  from holding Kinetics Small Cap or generate 4.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Aquagold International  vs.  Kinetics Small Cap

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Kinetics Small Cap

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Kinetics Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Kinetics Small

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

The idea behind Aquagold International and Kinetics Small Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.