Correlation Between Brooge Holdings and Kinetik Holdings

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

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

Diversification Opportunities for Brooge Holdings and Kinetik Holdings

0.05

Correlation Coefficient

Brooge Holdings  Kinetik Holdings

Significant diversification

The 3 months correlation between Brooge and Kinetik is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Brooge Holdings and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Brooge Holdings 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 Brooge Holdings are associated (or correlated) with Kinetik Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetik Holdings has no effect on the direction of Brooge Holdings i.e., Brooge Holdings and Kinetik Holdings go up and down completely randomly.

Pair Corralation between Brooge Holdings and Kinetik Holdings

Given the investment horizon of 90 days Brooge Holdings is expected to under-perform the Kinetik Holdings. In addition to that, Brooge Holdings is 3.0 times more volatile than Kinetik Holdings. It trades about -0.03 of its total potential returns per unit of risk. Kinetik Holdings is currently generating about 0.09 per unit of volatility. If you would invest  2,709  in Kinetik Holdings on September 4, 2024 and sell it today you would earn a total of  3,032  from holding Kinetik Holdings or generate 111.92% return on investment over 90 days.

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

Brooge Holdings  vs.  Kinetik Holdings

Brooge Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brooge Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Brooge Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Kinetik Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brooge Holdings and Kinetik Holdings

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

The idea behind Brooge Holdings and Kinetik Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.