Correlation Between KYN Capital and Regional Management

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

By analyzing existing cross correlation between KYN Capital Group and Regional Management Corp, you can compare the effects of market volatilities on KYN Capital and Regional Management 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 KYN Capital with a short position of Regional Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of KYN Capital and Regional Management.

Diversification Opportunities for KYN Capital and Regional Management

0.38

Correlation Coefficient

KYN Capital  Regional Management

Weak diversification

The 3 months correlation between KYN and Regional is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding KYN Capital Group and Regional Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Management Corp and KYN Capital 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 KYN Capital Group are associated (or correlated) with Regional Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Management Corp has no effect on the direction of KYN Capital i.e., KYN Capital and Regional Management go up and down completely randomly.

Pair Corralation between KYN Capital and Regional Management

Given the investment horizon of 90 days KYN Capital Group is expected to generate 3.9 times more return on investment than Regional Management. However, KYN Capital is 3.9 times more volatile than Regional Management Corp. It trades about 0.03 of its potential returns per unit of risk. Regional Management Corp is currently generating about -0.02 per unit of risk. If you would invest  0.09  in KYN Capital Group on September 2, 2024 and sell it today you would lose (0.01) from holding KYN Capital Group or give up 11.11% of portfolio value over 90 days.

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

KYN Capital Group  vs.  Regional Management Corp

KYN Capital Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KYN Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, KYN Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Regional Management Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Regional Management is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KYN Capital and Regional Management

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

The idea behind KYN Capital Group and Regional Management Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.