Correlation Between Kinetics Market and Small Pany

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Can any of the company-specific risk be diversified away by investing in both Kinetics Market and Small Pany 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 Market and Small Pany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Market Opportunities and Small Pany Growth, you can compare the effects of market volatilities on Kinetics Market and Small Pany 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 Market with a short position of Small Pany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Market and Small Pany.

Diversification Opportunities for Kinetics Market and Small Pany

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kinetics and Small is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth and Kinetics Market 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 Market Opportunities are associated (or correlated) with Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of Kinetics Market i.e., Kinetics Market and Small Pany go up and down completely randomly.

Pair Corralation between Kinetics Market and Small Pany

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 0.77 times more return on investment than Small Pany. However, Kinetics Market Opportunities is 1.3 times less risky than Small Pany. It trades about 0.11 of its potential returns per unit of risk. Small Pany Growth is currently generating about 0.05 per unit of risk. If you would invest  3,901  in Kinetics Market Opportunities on October 24, 2024 and sell it today you would earn a total of  4,563  from holding Kinetics Market Opportunities or generate 116.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Kinetics Market Opportunities  vs.  Small Pany Growth

 Performance 
       Timeline  
Kinetics Market Oppo 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Market showed solid returns over the last few months and may actually be approaching a breakup point.
Small Pany Growth 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Small Pany showed solid returns over the last few months and may actually be approaching a breakup point.

Kinetics Market and Small Pany Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kinetics Market and Small Pany

The main advantage of trading using opposite Kinetics Market and Small Pany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Market position performs unexpectedly, Small Pany 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 Small Pany will offset losses from the drop in Small Pany's long position.
The idea behind Kinetics Market Opportunities and Small Pany Growth 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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