Correlation Between Sienna Senior and KDA

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

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

Diversification Opportunities for Sienna Senior and KDA

-0.29

Correlation Coefficient

Sienna Senior  KDA

Very good diversification

The 3 months correlation between Sienna and KDA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group and Sienna Senior 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 Sienna Senior Living are associated (or correlated) with KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Sienna Senior i.e., Sienna Senior and KDA go up and down completely randomly.

Pair Corralation between Sienna Senior and KDA

Assuming the 90 days trading horizon Sienna Senior Living is expected to under-perform the KDA. But the stock apears to be less risky and, when comparing its historical volatility, Sienna Senior Living is 5.64 times less risky than KDA. The stock trades about -0.05 of its potential returns per unit of risk. The KDA Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  29.00  in KDA Group on September 17, 2024 and sell it today you would earn a total of  1.00  from holding KDA Group or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Sienna Senior Living  vs.  KDA Group

Sienna Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

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

KDA Group

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Sienna Senior and KDA

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

The idea behind Sienna Senior Living and KDA Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.