Correlation Between Kinetics Small and Ab Government

Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Ab Government 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 Kinetics Small and Ab Government into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinetics Small Cap and Ab Government Exchange, you can compare the effects of market volatilities on Kinetics Small and Ab Government 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 Kinetics Small with a short position of Ab Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Ab Government.

Diversification Opportunities for Kinetics Small and Ab Government

0.0

Correlation Coefficient

Kinetics Small  Ab Government

Pay attention - limited upside

The 3 months correlation between Kinetics and AEYXX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Ab Government Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Government Exchange and Kinetics Small 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 Kinetics Small Cap are associated (or correlated) with Ab Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Government Exchange has no effect on the direction of Kinetics Small i.e., Kinetics Small and Ab Government go up and down completely randomly.

Pair Corralation between Kinetics Small and Ab Government

Assuming the 90 days horizon Kinetics Small is expected to generate 58.28 times less return on investment than Ab Government. But when comparing it to its historical volatility, Kinetics Small Cap is 34.56 times less risky than Ab Government. It trades about 0.06 of its potential returns per unit of risk. Ab Government Exchange is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  409.00  in Ab Government Exchange on October 11, 2024 and sell it today you would lose (309.00) from holding Ab Government Exchange or give up 75.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	52.93%
Values	Daily Returns

Kinetics Small Cap  vs.  Ab Government Exchange

Kinetics Small Cap

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ab Government Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Government Exchange has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kinetics Small and Ab Government

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

The idea behind Kinetics Small Cap and Ab Government Exchange 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.