Correlation Between Kinaxis and Real Matters

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

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

Diversification Opportunities for Kinaxis and Real Matters

0.86

Correlation Coefficient

Kinaxis  Real Matters

Very poor diversification

The 3 months correlation between Kinaxis and Real is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kinaxis and Real Matters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Matters and Kinaxis 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 Kinaxis are associated (or correlated) with Real Matters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Matters has no effect on the direction of Kinaxis i.e., Kinaxis and Real Matters go up and down completely randomly.

Pair Corralation between Kinaxis and Real Matters

Assuming the 90 days trading horizon Kinaxis is expected to under-perform the Real Matters. But the stock apears to be less risky and, when comparing its historical volatility, Kinaxis is 1.35 times less risky than Real Matters. The stock trades about -0.1 of its potential returns per unit of risk. The Real Matters is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  650.00  in Real Matters on December 30, 2024 and sell it today you would lose (58.00) from holding Real Matters or give up 8.92% of portfolio value over 90 days.

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

Kinaxis  vs.  Real Matters

Kinaxis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinaxis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Real Matters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Real Matters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Kinaxis and Real Matters

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

The idea behind Kinaxis and Real Matters 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.