Correlation Between Fevertree Drinks and Kinetik Holdings

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

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

Diversification Opportunities for Fevertree Drinks and Kinetik Holdings

-0.9

Correlation Coefficient

Fevertree Drinks  Kinetik Holdings

Pay attention - limited upside

The 3 months correlation between Fevertree and Kinetik is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Fevertree Drinks 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 Fevertree Drinks Plc 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 Fevertree Drinks i.e., Fevertree Drinks and Kinetik Holdings go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Kinetik Holdings

Assuming the 90 days horizon Fevertree Drinks Plc is expected to under-perform the Kinetik Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 1.13 times less risky than Kinetik Holdings. The pink sheet trades about -0.2 of its potential returns per unit of risk. The Kinetik Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,372  in Kinetik Holdings on September 5, 2024 and sell it today you would earn a total of  1,369  from holding Kinetik Holdings or generate 31.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Fevertree Drinks Plc  vs.  Kinetik Holdings

Fevertree Drinks Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kinetik Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fevertree Drinks and Kinetik Holdings

The main advantage of trading using opposite Fevertree Drinks and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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 Fevertree Drinks Plc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.