Correlation Between Kinetics Internet and Tekla Healthcare

Can any of the company-specific risk be diversified away by investing in both Kinetics Internet 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 Internet 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 Internet Fund and Tekla Healthcare Opportunities, you can compare the effects of market volatilities on Kinetics Internet 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 Internet with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Internet and Tekla Healthcare.

Diversification Opportunities for Kinetics Internet and Tekla Healthcare

-0.71

Correlation Coefficient

Kinetics Internet  Tekla Healthcare

Pay attention - limited upside

The 3 months correlation between Kinetics and Tekla is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Internet 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 Internet 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 Internet 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 Internet i.e., Kinetics Internet and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Kinetics Internet and Tekla Healthcare

Assuming the 90 days horizon Kinetics Internet Fund is expected to generate 1.85 times more return on investment than Tekla Healthcare. However, Kinetics Internet is 1.85 times more volatile than Tekla Healthcare Opportunities. It trades about 0.34 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about -0.02 per unit of risk. If you would invest  6,956  in Kinetics Internet Fund on September 3, 2024 and sell it today you would earn a total of  3,556  from holding Kinetics Internet Fund or generate 51.12% return on investment over 90 days.

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

Kinetics Internet Fund  vs.  Tekla Healthcare Opportunities

Kinetics Internet

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Internet Fund are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Internet 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. Even with relatively invariable technical indicators, Tekla Healthcare is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kinetics Internet and Tekla Healthcare

The main advantage of trading using opposite Kinetics Internet and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Internet 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 Internet 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.