Correlation Between KKR Co and Healthcare

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

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

Diversification Opportunities for KKR Co and Healthcare

-0.55

Correlation Coefficient

KKR Co  Healthcare

Excellent diversification

The 3 months correlation between KKR and Healthcare is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Healthcare AI Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare AI Acquisition and KKR Co 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 KKR Co LP are associated (or correlated) with Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare AI Acquisition has no effect on the direction of KKR Co i.e., KKR Co and Healthcare go up and down completely randomly.

Pair Corralation between KKR Co and Healthcare

Considering the 90-day investment horizon KKR Co LP is expected to under-perform the Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, KKR Co LP is 25.6 times less risky than Healthcare. The stock trades about -0.02 of its potential returns per unit of risk. The Healthcare AI Acquisition is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1.11  in Healthcare AI Acquisition on September 12, 2024 and sell it today you would earn a total of  0.02  from holding Healthcare AI Acquisition or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.64%
Values	Daily Returns

KKR Co LP  vs.  Healthcare AI Acquisition

KKR Co LP

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, KKR Co reported solid returns over the last few months and may actually be approaching a breakup point.

Healthcare AI Acquisition

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Healthcare AI Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Healthcare showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KKR Co and Healthcare

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

The idea behind KKR Co LP and Healthcare AI Acquisition 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.