Correlation Between Ab Select and Kinetics Spin-off

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

By analyzing existing cross correlation between Ab Select Equity and Kinetics Spin Off And, you can compare the effects of market volatilities on Ab Select and Kinetics Spin-off 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 Ab Select with a short position of Kinetics Spin-off. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Kinetics Spin-off.

Diversification Opportunities for Ab Select and Kinetics Spin-off

0.89

Correlation Coefficient

Ab Select  Kinetics Spin-off

Very poor diversification

The 3 months correlation between AUUIX and Kinetics is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Equity and Kinetics Spin Off And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Spin Off and Ab Select 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 Ab Select Equity are associated (or correlated) with Kinetics Spin-off. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Spin Off has no effect on the direction of Ab Select i.e., Ab Select and Kinetics Spin-off go up and down completely randomly.

Pair Corralation between Ab Select and Kinetics Spin-off

Assuming the 90 days horizon Ab Select is expected to generate 4.42 times less return on investment than Kinetics Spin-off. But when comparing it to its historical volatility, Ab Select Equity is 4.29 times less risky than Kinetics Spin-off. It trades about 0.26 of its potential returns per unit of risk. Kinetics Spin Off And is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,733  in Kinetics Spin Off And on September 7, 2024 and sell it today you would earn a total of  1,458  from holding Kinetics Spin Off And or generate 53.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Ab Select Equity  vs.  Kinetics Spin Off And

Ab Select Equity

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Select Equity are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ab Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kinetics Spin Off

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Spin Off And are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Kinetics Spin-off showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ab Select and Kinetics Spin-off

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

The idea behind Ab Select Equity and Kinetics Spin Off And 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 Transaction History module to view history of all your transactions and understand their impact on performance.