Correlation Between Kinetics Paradigm and Tekla Healthcare

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

Diversification Opportunities for Kinetics Paradigm and Tekla Healthcare

-0.8

Correlation Coefficient

Kinetics Paradigm  Tekla Healthcare

Pay attention - limited upside

The 3 months correlation between Kinetics and Tekla is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Tekla Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Inv and Kinetics Paradigm 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 Paradigm 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 Inv has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Tekla Healthcare

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to under-perform the Tekla Healthcare. In addition to that, Kinetics Paradigm is 3.41 times more volatile than Tekla Healthcare Investors. It trades about -0.07 of its total potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.14 per unit of volatility. If you would invest  1,990  in Tekla Healthcare Investors on September 14, 2024 and sell it today you would lose (70.00) from holding Tekla Healthcare Investors or give up 3.52% of portfolio value over 90 days.

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

Kinetics Paradigm Fund  vs.  Tekla Healthcare Investors

Kinetics Paradigm

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Paradigm showed solid returns over the last few months and may actually be approaching a breakup point.

Tekla Healthcare Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Investors has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Kinetics Paradigm and Tekla Healthcare

The main advantage of trading using opposite Kinetics Paradigm and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm 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 Paradigm Fund and Tekla Healthcare Investors 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.