Correlation Between KKR Co and JSE

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

Diversification Opportunities for KKR Co and JSE

0.38

Correlation Coefficient

KKR Co  JSE

Weak diversification

The 3 months correlation between KKR and JSE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and JSE Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSE Limited 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 JSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSE Limited has no effect on the direction of KKR Co i.e., KKR Co and JSE go up and down completely randomly.

Pair Corralation between KKR Co and JSE

Considering the 90-day investment horizon KKR Co LP is expected to generate 0.44 times more return on investment than JSE. However, KKR Co LP is 2.29 times less risky than JSE. It trades about 0.11 of its potential returns per unit of risk. JSE Limited is currently generating about 0.04 per unit of risk. If you would invest  5,296  in KKR Co LP on October 13, 2024 and sell it today you would earn a total of  8,797  from holding KKR Co LP or generate 166.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	71.37%
Values	Daily Returns

KKR Co LP  vs.  JSE Limited

KKR Co LP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, KKR Co is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

JSE Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JSE Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, JSE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KKR Co and JSE

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

The idea behind KKR Co LP and JSE Limited 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .