Correlation Between FS KKR and Bowen Acquisition

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

By analyzing existing cross correlation between FS KKR Capital and Bowen Acquisition Corp, you can compare the effects of market volatilities on FS KKR and Bowen Acquisition 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 FS KKR with a short position of Bowen Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS KKR and Bowen Acquisition.

Diversification Opportunities for FS KKR and Bowen Acquisition

0.9

Correlation Coefficient

FS KKR  Bowen Acquisition

Almost no diversification

The 3 months correlation between FSK and Bowen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding FS KKR Capital and Bowen Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowen Acquisition Corp and FS KKR 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 FS KKR Capital are associated (or correlated) with Bowen Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowen Acquisition Corp has no effect on the direction of FS KKR i.e., FS KKR and Bowen Acquisition go up and down completely randomly.

Pair Corralation between FS KKR and Bowen Acquisition

Considering the 90-day investment horizon FS KKR Capital is expected to generate 4.35 times more return on investment than Bowen Acquisition. However, FS KKR is 4.35 times more volatile than Bowen Acquisition Corp. It trades about 0.24 of its potential returns per unit of risk. Bowen Acquisition Corp is currently generating about 0.14 per unit of risk. If you would invest  1,936  in FS KKR Capital on October 8, 2024 and sell it today you would earn a total of  238.00  from holding FS KKR Capital or generate 12.29% return on investment over 90 days.

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

FS KKR Capital  vs.  Bowen Acquisition Corp

FS KKR Capital

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, FS KKR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bowen Acquisition Corp

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bowen Acquisition Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bowen Acquisition is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FS KKR and Bowen Acquisition

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

The idea behind FS KKR Capital and Bowen Acquisition Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.