Correlation Between Lion Financial and KKR Co

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

By analyzing existing cross correlation between Lion Financial Group and KKR Co LP, you can compare the effects of market volatilities on Lion Financial and KKR Co 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 Lion Financial with a short position of KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Financial and KKR Co.

Diversification Opportunities for Lion Financial and KKR Co

-0.15

Correlation Coefficient

Lion Financial  KKR Co

Good diversification

The 3 months correlation between Lion and KKR is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP and Lion Financial 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 Lion Financial Group are associated (or correlated) with KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Lion Financial i.e., Lion Financial and KKR Co go up and down completely randomly.

Pair Corralation between Lion Financial and KKR Co

Assuming the 90 days horizon Lion Financial Group is expected to generate 5.19 times more return on investment than KKR Co. However, Lion Financial is 5.19 times more volatile than KKR Co LP. It trades about -0.02 of its potential returns per unit of risk. KKR Co LP is currently generating about -0.12 per unit of risk. If you would invest  0.85  in Lion Financial Group on October 4, 2024 and sell it today you would lose (0.12) from holding Lion Financial Group or give up 14.12% of portfolio value over 90 days.

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

Lion Financial Group  vs.  KKR Co LP

Lion Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

KKR Co LP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, KKR Co reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion Financial and KKR Co

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

The idea behind Lion Financial Group and KKR Co LP 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.