Correlation Between BAXALTA and Kinetik Holdings

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

By analyzing existing cross correlation between BAXALTA INC 525 and Kinetik Holdings, you can compare the effects of market volatilities on BAXALTA and Kinetik Holdings 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 BAXALTA with a short position of Kinetik Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAXALTA and Kinetik Holdings.

Diversification Opportunities for BAXALTA and Kinetik Holdings

-0.4

Correlation Coefficient

BAXALTA  Kinetik Holdings

Very good diversification

The 3 months correlation between BAXALTA and Kinetik is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BAXALTA INC 525 and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and BAXALTA 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 BAXALTA INC 525 are associated (or correlated) with Kinetik Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetik Holdings has no effect on the direction of BAXALTA i.e., BAXALTA and Kinetik Holdings go up and down completely randomly.

Pair Corralation between BAXALTA and Kinetik Holdings

Assuming the 90 days trading horizon BAXALTA INC 525 is expected to generate 1.34 times more return on investment than Kinetik Holdings. However, BAXALTA is 1.34 times more volatile than Kinetik Holdings. It trades about 0.49 of its potential returns per unit of risk. Kinetik Holdings is currently generating about 0.53 per unit of risk. If you would invest  9,221  in BAXALTA INC 525 on October 26, 2024 and sell it today you would earn a total of  376.00  from holding BAXALTA INC 525 or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	22.22%
Values	Daily Returns

BAXALTA INC 525  vs.  Kinetik Holdings

BAXALTA INC 525

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BAXALTA INC 525 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BAXALTA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Kinetik Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BAXALTA and Kinetik Holdings

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

The idea behind BAXALTA INC 525 and Kinetik Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.