Correlation Between TNB and Kamino

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

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

Diversification Opportunities for TNB and Kamino

0.74

Correlation Coefficient

TNB  Kamino

Poor diversification

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

Pair Corralation between TNB and Kamino

Assuming the 90 days trading horizon TNB is expected to generate 18.9 times less return on investment than Kamino. But when comparing it to its historical volatility, TNB is 38.5 times less risky than Kamino. It trades about 0.26 of its potential returns per unit of risk. Kamino is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3.96  in Kamino on September 1, 2024 and sell it today you would earn a total of  11.04  from holding Kamino or generate 278.79% return on investment over 90 days.

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

TNB  vs.  Kamino

TNB

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TNB are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, TNB exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kamino

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kamino are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Kamino exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TNB and Kamino

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

The idea behind TNB and Kamino 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.