Correlation Between Kinetics Small and Aam/himco Short

Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Aam/himco Short 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 Aam/himco Short 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 Aamhimco Short Duration, you can compare the effects of market volatilities on Kinetics Small and Aam/himco Short 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 Aam/himco Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Aam/himco Short.

Diversification Opportunities for Kinetics Small and Aam/himco Short

0.04

Correlation Coefficient

Kinetics Small  Aam/himco Short

Significant diversification

The 3 months correlation between Kinetics and Aam/himco is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Aamhimco Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aamhimco Short Duration 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 Aam/himco Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aamhimco Short Duration has no effect on the direction of Kinetics Small i.e., Kinetics Small and Aam/himco Short go up and down completely randomly.

Pair Corralation between Kinetics Small and Aam/himco Short

Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Aam/himco Short. In addition to that, Kinetics Small is 19.46 times more volatile than Aamhimco Short Duration. It trades about -0.14 of its total potential returns per unit of risk. Aamhimco Short Duration is currently generating about -0.17 per unit of volatility. If you would invest  1,004  in Aamhimco Short Duration on October 10, 2024 and sell it today you would lose (4.00) from holding Aamhimco Short Duration or give up 0.4% of portfolio value over 90 days.

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

Kinetics Small Cap  vs.  Aamhimco Short Duration

Kinetics Small Cap

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.

Aamhimco Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aamhimco Short Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Aam/himco Short 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 Aam/himco Short

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

The idea behind Kinetics Small Cap and Aamhimco Short Duration 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.