Correlation Between KENEDIX OFFICE and CVS Health

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

By analyzing existing cross correlation between KENEDIX OFFICE INV and CVS Health, you can compare the effects of market volatilities on KENEDIX OFFICE and CVS Health 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 KENEDIX OFFICE with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENEDIX OFFICE and CVS Health.

Diversification Opportunities for KENEDIX OFFICE and CVS Health

0.35

Correlation Coefficient

KENEDIX OFFICE  CVS Health

Weak diversification

The 3 months correlation between KENEDIX and CVS is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding KENEDIX OFFICE INV and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and KENEDIX OFFICE 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 KENEDIX OFFICE INV are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of KENEDIX OFFICE i.e., KENEDIX OFFICE and CVS Health go up and down completely randomly.

Pair Corralation between KENEDIX OFFICE and CVS Health

Assuming the 90 days horizon KENEDIX OFFICE INV is expected to generate 0.4 times more return on investment than CVS Health. However, KENEDIX OFFICE INV is 2.51 times less risky than CVS Health. It trades about -0.07 of its potential returns per unit of risk. CVS Health is currently generating about -0.08 per unit of risk. If you would invest  93,500  in KENEDIX OFFICE INV on September 23, 2024 and sell it today you would lose (5,500) from holding KENEDIX OFFICE INV or give up 5.88% of portfolio value over 90 days.

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

KENEDIX OFFICE INV  vs.  CVS Health

KENEDIX OFFICE INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KENEDIX OFFICE INV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KENEDIX OFFICE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

CVS Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with KENEDIX OFFICE and CVS Health

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

The idea behind KENEDIX OFFICE INV and CVS Health 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.