Correlation Between KKR Co and CERo Therapeutics

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

By analyzing existing cross correlation between KKR Co LP and CERo Therapeutics Holdings, you can compare the effects of market volatilities on KKR Co and CERo Therapeutics 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 KKR Co with a short position of CERo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and CERo Therapeutics.

Diversification Opportunities for KKR Co and CERo Therapeutics

0.65

Correlation Coefficient

KKR Co  CERo Therapeutics

Poor diversification

The 3 months correlation between KKR and CERo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and CERo Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CERo Therapeutics and KKR Co 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 KKR Co LP are associated (or correlated) with CERo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CERo Therapeutics has no effect on the direction of KKR Co i.e., KKR Co and CERo Therapeutics go up and down completely randomly.

Pair Corralation between KKR Co and CERo Therapeutics

Considering the 90-day investment horizon KKR Co is expected to generate 10.42 times less return on investment than CERo Therapeutics. But when comparing it to its historical volatility, KKR Co LP is 15.36 times less risky than CERo Therapeutics. It trades about 0.13 of its potential returns per unit of risk. CERo Therapeutics Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7.00  in CERo Therapeutics Holdings on September 24, 2024 and sell it today you would lose (6.10) from holding CERo Therapeutics Holdings or give up 87.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	32.93%
Values	Daily Returns

KKR Co LP  vs.  CERo Therapeutics Holdings

KKR Co LP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, KKR Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CERo Therapeutics

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KKR Co and CERo Therapeutics

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

The idea behind KKR Co LP and CERo Therapeutics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.