Correlation Between Kinetik Holdings and Tonogold Resources

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

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

Diversification Opportunities for Kinetik Holdings and Tonogold Resources

0.05

Correlation Coefficient

Kinetik Holdings  Tonogold Resources

Significant diversification

The 3 months correlation between Kinetik and Tonogold is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Tonogold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tonogold Resources 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 Tonogold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tonogold Resources has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Tonogold Resources go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Tonogold Resources

Given the investment horizon of 90 days Kinetik Holdings is expected to under-perform the Tonogold Resources. But the stock apears to be less risky and, when comparing its historical volatility, Kinetik Holdings is 6.86 times less risky than Tonogold Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Tonogold Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.45  in Tonogold Resources on December 20, 2024 and sell it today you would lose (0.36) from holding Tonogold Resources or give up 24.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Kinetik Holdings  vs.  Tonogold Resources

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.

Tonogold Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tonogold Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Tonogold Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetik Holdings and Tonogold Resources

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

The idea behind Kinetik Holdings and Tonogold Resources 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.