Correlation Between DAIMLERCHRYSLER and Kinetik Holdings

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

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

Diversification Opportunities for DAIMLERCHRYSLER and Kinetik Holdings

-0.52

Correlation Coefficient

DAIMLERCHRYSLER  Kinetik Holdings

Excellent diversification

The 3 months correlation between DAIMLERCHRYSLER and Kinetik is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding DAIMLERCHRYSLER NORTH AMER and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and DAIMLERCHRYSLER 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 DAIMLERCHRYSLER NORTH AMER 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 DAIMLERCHRYSLER i.e., DAIMLERCHRYSLER and Kinetik Holdings go up and down completely randomly.

Pair Corralation between DAIMLERCHRYSLER and Kinetik Holdings

Assuming the 90 days trading horizon DAIMLERCHRYSLER NORTH AMER is expected to generate 0.77 times more return on investment than Kinetik Holdings. However, DAIMLERCHRYSLER NORTH AMER is 1.3 times less risky than Kinetik Holdings. It trades about 0.17 of its potential returns per unit of risk. Kinetik Holdings is currently generating about 0.1 per unit of risk. If you would invest  11,880  in DAIMLERCHRYSLER NORTH AMER on October 9, 2024 and sell it today you would earn a total of  618.00  from holding DAIMLERCHRYSLER NORTH AMER or generate 5.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

DAIMLERCHRYSLER NORTH AMER  vs.  Kinetik Holdings

DAIMLERCHRYSLER NORTH

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DAIMLERCHRYSLER NORTH AMER are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DAIMLERCHRYSLER 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

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAIMLERCHRYSLER and Kinetik Holdings

The main advantage of trading using opposite DAIMLERCHRYSLER and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIMLERCHRYSLER 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 DAIMLERCHRYSLER NORTH AMER 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.