Correlation Between Kinetik Holdings and Spanish Mountain

Can any of the company-specific risk be diversified away by investing in both Kinetik Holdings and Spanish 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 Spanish 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 Spanish Mountain Gold, you can compare the effects of market volatilities on Kinetik Holdings and Spanish 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 Spanish Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and Spanish Mountain.

Diversification Opportunities for Kinetik Holdings and Spanish Mountain

-0.12

Correlation Coefficient

Kinetik Holdings  Spanish Mountain

Good diversification

The 3 months correlation between Kinetik and Spanish is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Spanish Mountain Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spanish Mountain Gold 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 Spanish Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spanish Mountain Gold has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Spanish Mountain go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Spanish Mountain

Given the investment horizon of 90 days Kinetik Holdings is expected to under-perform the Spanish Mountain. But the stock apears to be less risky and, when comparing its historical volatility, Kinetik Holdings is 2.83 times less risky than Spanish Mountain. The stock trades about -0.04 of its potential returns per unit of risk. The Spanish Mountain Gold is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Spanish Mountain Gold on December 21, 2024 and sell it today you would earn a total of  2.86  from holding Spanish Mountain Gold or generate 40.86% return on investment over 90 days.

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

Kinetik Holdings  vs.  Spanish Mountain Gold

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.

Spanish Mountain Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spanish Mountain Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Spanish Mountain reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetik Holdings and Spanish Mountain

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

The idea behind Kinetik Holdings and Spanish Mountain Gold 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.