Correlation Between Kinetik Holdings and First Community

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

By analyzing existing cross correlation between Kinetik Holdings and First Community Financial, you can compare the effects of market volatilities on Kinetik Holdings and First Community 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 Kinetik Holdings with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and First Community.

Diversification Opportunities for Kinetik Holdings and First Community

0.34

Correlation Coefficient

Kinetik Holdings  First Community

Weak diversification

The 3 months correlation between Kinetik and First is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and First Community Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Financial and Kinetik Holdings 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 Kinetik Holdings are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Financial has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and First Community go up and down completely randomly.

Pair Corralation between Kinetik Holdings and First Community

Given the investment horizon of 90 days Kinetik Holdings is expected to generate 0.92 times more return on investment than First Community. However, Kinetik Holdings is 1.09 times less risky than First Community. It trades about -0.03 of its potential returns per unit of risk. First Community Financial is currently generating about -0.1 per unit of risk. If you would invest  5,706  in Kinetik Holdings on December 20, 2024 and sell it today you would lose (335.00) from holding Kinetik Holdings or give up 5.87% of portfolio value over 90 days.

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

Kinetik Holdings  vs.  First Community Financial

Kinetik Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetik Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kinetik Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

First Community Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Community Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Kinetik Holdings and First Community

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

The idea behind Kinetik Holdings and First Community Financial 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.