Correlation Between Empresa Distribuidora and Kinetik Holdings

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

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

Diversification Opportunities for Empresa Distribuidora and Kinetik Holdings

0.84

Correlation Coefficient

Empresa Distribuidora  Kinetik Holdings

Very poor diversification

The 3 months correlation between Empresa and Kinetik is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Empresa Distribuidora 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 Empresa Distribuidora y 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 Empresa Distribuidora i.e., Empresa Distribuidora and Kinetik Holdings go up and down completely randomly.

Pair Corralation between Empresa Distribuidora and Kinetik Holdings

Considering the 90-day investment horizon Empresa Distribuidora y is expected to generate 1.41 times more return on investment than Kinetik Holdings. However, Empresa Distribuidora is 1.41 times more volatile than Kinetik Holdings. It trades about 0.38 of its potential returns per unit of risk. Kinetik Holdings is currently generating about 0.21 per unit of risk. If you would invest  2,452  in Empresa Distribuidora y on September 14, 2024 and sell it today you would earn a total of  2,333  from holding Empresa Distribuidora y or generate 95.15% return on investment over 90 days.

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

Empresa Distribuidora y  vs.  Kinetik Holdings

Empresa Distribuidora

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Empresa Distribuidora displayed solid returns over the last few months and may actually be approaching a breakup point.

Kinetik Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 16 (%) 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 Empresa Distribuidora and Kinetik Holdings

The main advantage of trading using opposite Empresa Distribuidora and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Distribuidora 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 Empresa Distribuidora y 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.