Correlation Between Kite Realty and Agape ATP

Can any of the company-specific risk be diversified away by investing in both Kite Realty and Agape ATP 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 Kite Realty and Agape ATP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kite Realty Group and Agape ATP, you can compare the effects of market volatilities on Kite Realty and Agape ATP 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 Kite Realty with a short position of Agape ATP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kite Realty and Agape ATP.

Diversification Opportunities for Kite Realty and Agape ATP

0.29

Correlation Coefficient

Kite Realty  Agape ATP

Modest diversification

The 3 months correlation between Kite and Agape is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and Agape ATP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agape ATP and Kite Realty 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 Kite Realty Group are associated (or correlated) with Agape ATP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agape ATP has no effect on the direction of Kite Realty i.e., Kite Realty and Agape ATP go up and down completely randomly.

Pair Corralation between Kite Realty and Agape ATP

Considering the 90-day investment horizon Kite Realty Group is expected to under-perform the Agape ATP. But the stock apears to be less risky and, when comparing its historical volatility, Kite Realty Group is 7.76 times less risky than Agape ATP. The stock trades about -0.1 of its potential returns per unit of risk. The Agape ATP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  194.00  in Agape ATP on October 24, 2024 and sell it today you would lose (44.00) from holding Agape ATP or give up 22.68% of portfolio value over 90 days.

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

Kite Realty Group  vs.  Agape ATP

Kite Realty Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Agape ATP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agape ATP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Agape ATP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kite Realty and Agape ATP

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

The idea behind Kite Realty Group and Agape ATP 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.