Correlation Between FS KKR and Vita Coco

Can any of the company-specific risk be diversified away by investing in both FS KKR and Vita Coco 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 Vita Coco 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 Vita Coco, you can compare the effects of market volatilities on FS KKR and Vita Coco 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 Vita Coco. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS KKR and Vita Coco.

Diversification Opportunities for FS KKR and Vita Coco

0.71

Correlation Coefficient

FS KKR  Vita Coco

Poor diversification

The 3 months correlation between FSK and Vita is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding FS KKR Capital and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco 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 Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of FS KKR i.e., FS KKR and Vita Coco go up and down completely randomly.

Pair Corralation between FS KKR and Vita Coco

Considering the 90-day investment horizon FS KKR is expected to generate 2.51 times less return on investment than Vita Coco. But when comparing it to its historical volatility, FS KKR Capital is 2.74 times less risky than Vita Coco. It trades about 0.09 of its potential returns per unit of risk. Vita Coco is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,357  in Vita Coco on October 22, 2024 and sell it today you would earn a total of  2,103  from holding Vita Coco or generate 154.97% return on investment over 90 days.

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

FS KKR Capital  vs.  Vita Coco

FS KKR Capital

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 17 (%) 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.

Vita Coco

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FS KKR and Vita Coco

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

The idea behind FS KKR Capital and Vita Coco 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.