Correlation Between Federal National and Kaya Holdings

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

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

Diversification Opportunities for Federal National and Kaya Holdings

-0.81

Correlation Coefficient

Federal National  Kaya Holdings

Pay attention - limited upside

The 3 months correlation between Federal and Kaya is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Kaya Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaya Holdings and Federal National 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 Federal National Mortgage are associated (or correlated) with Kaya Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaya Holdings has no effect on the direction of Federal National i.e., Federal National and Kaya Holdings go up and down completely randomly.

Pair Corralation between Federal National and Kaya Holdings

Assuming the 90 days horizon Federal National Mortgage is expected to generate 0.51 times more return on investment than Kaya Holdings. However, Federal National Mortgage is 1.95 times less risky than Kaya Holdings. It trades about 0.25 of its potential returns per unit of risk. Kaya Holdings is currently generating about -0.01 per unit of risk. If you would invest  3,300,000  in Federal National Mortgage on October 6, 2024 and sell it today you would earn a total of  500,000  from holding Federal National Mortgage or generate 15.15% return on investment over 90 days.

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

Federal National Mortgage  vs.  Kaya Holdings

Federal National Mortgage

Risk-Adjusted Performance

13 of 100

Good

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

Kaya Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaya Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Federal National and Kaya Holdings

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

The idea behind Federal National Mortgage and Kaya 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.