Correlation Between Kinatico and Health

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

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

Diversification Opportunities for Kinatico and Health

0.0

Correlation Coefficient

Kinatico  Health

Pay attention - limited upside

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

Pair Corralation between Kinatico and Health

Assuming the 90 days trading horizon Kinatico is expected to generate 1.89 times more return on investment than Health. However, Kinatico is 1.89 times more volatile than Health and Plant. It trades about 0.04 of its potential returns per unit of risk. Health and Plant is currently generating about -0.04 per unit of risk. If you would invest  9.80  in Kinatico on October 11, 2024 and sell it today you would earn a total of  4.20  from holding Kinatico or generate 42.86% return on investment over 90 days.

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

Kinatico  vs.  Health and Plant

Kinatico

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinatico are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kinatico unveiled solid returns over the last few months and may actually be approaching a breakup point.

Health and Plant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Health and Plant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kinatico and Health

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

The idea behind Kinatico and Health and Plant 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.