Correlation Between Safe Bulkers and Kinetik Holdings

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

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

Diversification Opportunities for Safe Bulkers and Kinetik Holdings

-0.74

Correlation Coefficient

Safe Bulkers  Kinetik Holdings

Pay attention - limited upside

The 3 months correlation between Safe and Kinetik is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Safe Bulkers 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 Safe Bulkers are associated (or correlated) with Kinetik Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetik Holdings has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Kinetik Holdings go up and down completely randomly.

Pair Corralation between Safe Bulkers and Kinetik Holdings

Allowing for the 90-day total investment horizon Safe Bulkers is expected to under-perform the Kinetik Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Safe Bulkers is 1.08 times less risky than Kinetik Holdings. The stock trades about -0.25 of its potential returns per unit of risk. The Kinetik Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  5,918  in Kinetik Holdings on September 25, 2024 and sell it today you would lose (153.00) from holding Kinetik Holdings or give up 2.59% of portfolio value over 90 days.

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

Safe Bulkers  vs.  Kinetik Holdings

Safe Bulkers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kinetik Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safe Bulkers and Kinetik Holdings

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

The idea behind Safe Bulkers and Kinetik Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.