Correlation Between Tfa Alphagen and Kinetics Small

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

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

Diversification Opportunities for Tfa Alphagen and Kinetics Small

0.11

Correlation Coefficient

Tfa Alphagen  Kinetics Small

Average diversification

The 3 months correlation between Tfa and Kinetics is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tfa Alphagen Growth and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Tfa Alphagen 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 Tfa Alphagen Growth are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Tfa Alphagen i.e., Tfa Alphagen and Kinetics Small go up and down completely randomly.

Pair Corralation between Tfa Alphagen and Kinetics Small

Assuming the 90 days horizon Tfa Alphagen Growth is expected to generate 0.49 times more return on investment than Kinetics Small. However, Tfa Alphagen Growth is 2.03 times less risky than Kinetics Small. It trades about -0.02 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about -0.1 per unit of risk. If you would invest  1,133  in Tfa Alphagen Growth on November 29, 2024 and sell it today you would lose (16.00) from holding Tfa Alphagen Growth or give up 1.41% of portfolio value over 90 days.

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

Tfa Alphagen Growth  vs.  Kinetics Small Cap

Tfa Alphagen Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tfa Alphagen Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Tfa Alphagen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Tfa Alphagen and Kinetics Small

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

The idea behind Tfa Alphagen Growth and Kinetics Small Cap 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.