Correlation Between Kennedy Wilson and Southcorp Capital

Can any of the company-specific risk be diversified away by investing in both Kennedy Wilson and Southcorp Capital 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 Kennedy Wilson and Southcorp Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kennedy Wilson Holdings and Southcorp Capital, you can compare the effects of market volatilities on Kennedy Wilson and Southcorp Capital 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 Kennedy Wilson with a short position of Southcorp Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kennedy Wilson and Southcorp Capital.

Diversification Opportunities for Kennedy Wilson and Southcorp Capital

0.16

Correlation Coefficient

Kennedy Wilson  Southcorp Capital

Average diversification

The 3 months correlation between Kennedy and Southcorp is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kennedy Wilson Holdings and Southcorp Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southcorp Capital and Kennedy Wilson 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 Kennedy Wilson Holdings are associated (or correlated) with Southcorp Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southcorp Capital has no effect on the direction of Kennedy Wilson i.e., Kennedy Wilson and Southcorp Capital go up and down completely randomly.

Pair Corralation between Kennedy Wilson and Southcorp Capital

Allowing for the 90-day total investment horizon Kennedy Wilson Holdings is expected to under-perform the Southcorp Capital. But the stock apears to be less risky and, when comparing its historical volatility, Kennedy Wilson Holdings is 198.29 times less risky than Southcorp Capital. The stock trades about -0.44 of its potential returns per unit of risk. The Southcorp Capital is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Southcorp Capital on October 10, 2024 and sell it today you would lose (0.28) from holding Southcorp Capital or give up 93.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Kennedy Wilson Holdings  vs.  Southcorp Capital

Kennedy Wilson Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kennedy Wilson Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Southcorp Capital

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southcorp Capital are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Southcorp Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kennedy Wilson and Southcorp Capital

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

The idea behind Kennedy Wilson Holdings and Southcorp Capital 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.