Correlation Between Kinetik Holdings and Rocky Mountain

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

By analyzing existing cross correlation between Kinetik Holdings and Rocky Mountain Chocolate, you can compare the effects of market volatilities on Kinetik Holdings and Rocky Mountain 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 Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and Rocky Mountain.

Diversification Opportunities for Kinetik Holdings and Rocky Mountain

0.43

Correlation Coefficient

Kinetik Holdings  Rocky Mountain

Very weak diversification

The 3 months correlation between Kinetik and Rocky is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Rocky Mountain Chocolate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Chocolate 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 Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Chocolate has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Rocky Mountain go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Rocky Mountain

Given the investment horizon of 90 days Kinetik Holdings is expected to generate 0.56 times more return on investment than Rocky Mountain. However, Kinetik Holdings is 1.79 times less risky than Rocky Mountain. It trades about 0.15 of its potential returns per unit of risk. Rocky Mountain Chocolate is currently generating about -0.03 per unit of risk. If you would invest  5,636  in Kinetik Holdings on October 12, 2024 and sell it today you would earn a total of  329.00  from holding Kinetik Holdings or generate 5.84% return on investment over 90 days.

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

Kinetik Holdings  vs.  Rocky Mountain Chocolate

Kinetik Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Rocky Mountain Chocolate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rocky Mountain Chocolate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Rocky Mountain reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetik Holdings and Rocky Mountain

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

The idea behind Kinetik Holdings and Rocky Mountain Chocolate 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.