Correlation Between KKRS and Carlyle

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

By analyzing existing cross correlation between KKRS and The Carlyle Group, you can compare the effects of market volatilities on KKRS and Carlyle 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 KKRS with a short position of Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKRS and Carlyle.

Diversification Opportunities for KKRS and Carlyle

0.81

Correlation Coefficient

KKRS  Carlyle

Very poor diversification

The 3 months correlation between KKRS and Carlyle is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding KKRS and The Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and KKRS 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 KKRS are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of KKRS i.e., KKRS and Carlyle go up and down completely randomly.

Pair Corralation between KKRS and Carlyle

Given the investment horizon of 90 days KKRS is expected to under-perform the Carlyle. But the stock apears to be less risky and, when comparing its historical volatility, KKRS is 1.56 times less risky than Carlyle. The stock trades about -0.44 of its potential returns per unit of risk. The The Carlyle Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,871  in The Carlyle Group on October 12, 2024 and sell it today you would lose (45.00) from holding The Carlyle Group or give up 2.41% of portfolio value over 90 days.

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

KKRS  vs.  The Carlyle Group

KKRS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KKRS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with KKRS and Carlyle

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

The idea behind KKRS and The Carlyle Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.