Correlation Between KKR Co and GUOTAI JUNAN

Can any of the company-specific risk be diversified away by investing in both KKR Co and GUOTAI JUNAN 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 KKR Co and GUOTAI JUNAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KKR Co LP and GUOTAI JUNAN SEC, you can compare the effects of market volatilities on KKR Co and GUOTAI JUNAN 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 KKR Co with a short position of GUOTAI JUNAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and GUOTAI JUNAN.

Diversification Opportunities for KKR Co and GUOTAI JUNAN

0.17

Correlation Coefficient

KKR Co  GUOTAI JUNAN

Average diversification

The 3 months correlation between KKR and GUOTAI is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC and KKR Co 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 KKR Co LP are associated (or correlated) with GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of KKR Co i.e., KKR Co and GUOTAI JUNAN go up and down completely randomly.

Pair Corralation between KKR Co and GUOTAI JUNAN

Assuming the 90 days trading horizon KKR Co LP is expected to generate 0.97 times more return on investment than GUOTAI JUNAN. However, KKR Co LP is 1.03 times less risky than GUOTAI JUNAN. It trades about 0.2 of its potential returns per unit of risk. GUOTAI JUNAN SEC is currently generating about -0.16 per unit of risk. If you would invest  14,330  in KKR Co LP on October 24, 2024 and sell it today you would earn a total of  1,068  from holding KKR Co LP or generate 7.45% return on investment over 90 days.

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

KKR Co LP  vs.  GUOTAI JUNAN SEC

KKR Co LP

Risk-Adjusted Performance

9 of 100

OK

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

GUOTAI JUNAN SEC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GUOTAI JUNAN SEC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GUOTAI JUNAN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KKR Co and GUOTAI JUNAN

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

The idea behind KKR Co LP and GUOTAI JUNAN SEC 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.