Correlation Between Horizon Kinetics and CHIE

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

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

Diversification Opportunities for Horizon Kinetics and CHIE

-0.59

Correlation Coefficient

Horizon Kinetics  CHIE

Excellent diversification

The 3 months correlation between Horizon and CHIE is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics SPAC and CHIE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIE and Horizon Kinetics 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 Horizon Kinetics SPAC are associated (or correlated) with CHIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIE has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and CHIE go up and down completely randomly.

Pair Corralation between Horizon Kinetics and CHIE

If you would invest  9,757  in Horizon Kinetics SPAC on September 30, 2024 and sell it today you would earn a total of  84.00  from holding Horizon Kinetics SPAC or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Horizon Kinetics SPAC  vs.  CHIE

Horizon Kinetics SPAC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics SPAC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Horizon Kinetics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

CHIE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, CHIE is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Horizon Kinetics and CHIE

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

The idea behind Horizon Kinetics SPAC and CHIE 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.