Correlation Between Kinetics Global and Tekla Healthcare

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

By analyzing existing cross correlation between Kinetics Global Fund and Tekla Healthcare Opportunities, you can compare the effects of market volatilities on Kinetics Global and Tekla Healthcare 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 Kinetics Global with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Global and Tekla Healthcare.

Diversification Opportunities for Kinetics Global and Tekla Healthcare

-0.66

Correlation Coefficient

Kinetics Global  Tekla Healthcare

Excellent diversification

The 3 months correlation between Kinetics and Tekla is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Tekla Healthcare Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Opp and Kinetics Global 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 Kinetics Global Fund are associated (or correlated) with Tekla Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Healthcare Opp has no effect on the direction of Kinetics Global i.e., Kinetics Global and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Kinetics Global and Tekla Healthcare

Assuming the 90 days horizon Kinetics Global Fund is expected to generate 2.12 times more return on investment than Tekla Healthcare. However, Kinetics Global is 2.12 times more volatile than Tekla Healthcare Opportunities. It trades about 0.14 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about -0.01 per unit of risk. If you would invest  1,050  in Kinetics Global Fund on October 12, 2024 and sell it today you would earn a total of  466.00  from holding Kinetics Global Fund or generate 44.38% return on investment over 90 days.

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

Kinetics Global Fund  vs.  Tekla Healthcare Opportunities

Kinetics Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Global showed solid returns over the last few months and may actually be approaching a breakup point.

Tekla Healthcare Opp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Kinetics Global and Tekla Healthcare

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

The idea behind Kinetics Global Fund and Tekla Healthcare Opportunities 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.