Correlation Between Sandon Capital and K2 Asset

Can any of the company-specific risk be diversified away by investing in both Sandon Capital and K2 Asset 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 Sandon Capital and K2 Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sandon Capital Investments and K2 Asset Management, you can compare the effects of market volatilities on Sandon Capital and K2 Asset 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 Sandon Capital with a short position of K2 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandon Capital and K2 Asset.

Diversification Opportunities for Sandon Capital and K2 Asset

0.55

Correlation Coefficient

Sandon Capital  K2 Asset

Very weak diversification

The 3 months correlation between Sandon and KAM is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sandon Capital Investments and K2 Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Asset Management and Sandon Capital 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 Sandon Capital Investments are associated (or correlated) with K2 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Asset Management has no effect on the direction of Sandon Capital i.e., Sandon Capital and K2 Asset go up and down completely randomly.

Pair Corralation between Sandon Capital and K2 Asset

Assuming the 90 days trading horizon Sandon Capital Investments is expected to generate 0.36 times more return on investment than K2 Asset. However, Sandon Capital Investments is 2.74 times less risky than K2 Asset. It trades about 0.05 of its potential returns per unit of risk. K2 Asset Management is currently generating about -0.02 per unit of risk. If you would invest  76.00  in Sandon Capital Investments on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Sandon Capital Investments or generate 3.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Sandon Capital Investments  vs.  K2 Asset Management

Sandon Capital Inves

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sandon Capital Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Sandon Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

K2 Asset Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days K2 Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, K2 Asset is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sandon Capital and K2 Asset

The main advantage of trading using opposite Sandon Capital and K2 Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandon Capital position performs unexpectedly, K2 Asset 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 K2 Asset will offset losses from the drop in K2 Asset's long position.

The idea behind Sandon Capital Investments and K2 Asset Management 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 Transaction History module to view history of all your transactions and understand their impact on performance.