Correlation Between Aquagold International and FS KKR

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

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

Diversification Opportunities for Aquagold International and FS KKR

-0.27

Correlation Coefficient

Aquagold International  FS KKR

Very good diversification

The 3 months correlation between Aquagold and FSK is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and FS KKR Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS KKR Capital and Aquagold International 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 Aquagold International are associated (or correlated) with FS KKR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS KKR Capital has no effect on the direction of Aquagold International i.e., Aquagold International and FS KKR go up and down completely randomly.

Pair Corralation between Aquagold International and FS KKR

Given the investment horizon of 90 days Aquagold International is expected to under-perform the FS KKR. In addition to that, Aquagold International is 15.52 times more volatile than FS KKR Capital. It trades about -0.13 of its total potential returns per unit of risk. FS KKR Capital is currently generating about 0.28 per unit of volatility. If you would invest  1,910  in FS KKR Capital on September 28, 2024 and sell it today you would earn a total of  264.00  from holding FS KKR Capital or generate 13.82% return on investment over 90 days.

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

Aquagold International  vs.  FS KKR Capital

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

FS KKR Capital

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, FS KKR disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquagold International and FS KKR

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

The idea behind Aquagold International and FS KKR Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.