Correlation Between 360 Finance and KINDER

Can any of the company-specific risk be diversified away by investing in both 360 Finance and KINDER 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 360 Finance and KINDER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 360 Finance and KINDER MORGAN ENERGY, you can compare the effects of market volatilities on 360 Finance and KINDER 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 360 Finance with a short position of KINDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of 360 Finance and KINDER.

Diversification Opportunities for 360 Finance and KINDER

-0.47

Correlation Coefficient

360 Finance  KINDER

Very good diversification

The 3 months correlation between 360 and KINDER is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding 360 Finance and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN ENERGY and 360 Finance 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 360 Finance are associated (or correlated) with KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of 360 Finance i.e., 360 Finance and KINDER go up and down completely randomly.

Pair Corralation between 360 Finance and KINDER

Given the investment horizon of 90 days 360 Finance is expected to generate 37.71 times less return on investment than KINDER. But when comparing it to its historical volatility, 360 Finance is 29.11 times less risky than KINDER. It trades about 0.06 of its potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  10,278  in KINDER MORGAN ENERGY on October 5, 2024 and sell it today you would lose (859.00) from holding KINDER MORGAN ENERGY or give up 8.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.68%
Values	Daily Returns

360 Finance  vs.  KINDER MORGAN ENERGY

360 Finance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 360 Finance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, 360 Finance displayed solid returns over the last few months and may actually be approaching a breakup point.

KINDER MORGAN ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for KINDER MORGAN ENERGY investors.

Pair Trading with 360 Finance and KINDER

The main advantage of trading using opposite 360 Finance and KINDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 360 Finance position performs unexpectedly, KINDER 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 KINDER will offset losses from the drop in KINDER's long position.

The idea behind 360 Finance and KINDER MORGAN ENERGY 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..