Correlation Between KINDER and Catalent

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

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

Diversification Opportunities for KINDER and Catalent

0.06

Correlation Coefficient

KINDER  Catalent

Significant diversification

The 3 months correlation between KINDER and Catalent is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding KINDER MORGAN INC and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and KINDER 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 KINDER MORGAN INC are associated (or correlated) with Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of KINDER i.e., KINDER and Catalent go up and down completely randomly.

Pair Corralation between KINDER and Catalent

Assuming the 90 days trading horizon KINDER MORGAN INC is expected to under-perform the Catalent. In addition to that, KINDER is 1.75 times more volatile than Catalent. It trades about -0.06 of its total potential returns per unit of risk. Catalent is currently generating about 0.41 per unit of volatility. If you would invest  6,098  in Catalent on September 23, 2024 and sell it today you would earn a total of  250.00  from holding Catalent or generate 4.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

KINDER MORGAN INC  vs.  Catalent

KINDER MORGAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Catalent

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KINDER and Catalent

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

The idea behind KINDER MORGAN INC and Catalent 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 CEOs Directory module to screen CEOs from public companies around the world.