Correlation Between Kinetik Holdings and Vita Coco

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

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

Diversification Opportunities for Kinetik Holdings and Vita Coco

0.9

Correlation Coefficient

Kinetik Holdings  Vita Coco

Almost no diversification

The 3 months correlation between Kinetik and Vita is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco and Kinetik Holdings 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 Kinetik Holdings are associated (or correlated) with Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Vita Coco go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Vita Coco

Given the investment horizon of 90 days Kinetik Holdings is expected to under-perform the Vita Coco. In addition to that, Kinetik Holdings is 2.1 times more volatile than Vita Coco. It trades about -0.07 of its total potential returns per unit of risk. Vita Coco is currently generating about 0.06 per unit of volatility. If you would invest  3,591  in Vita Coco on September 27, 2024 and sell it today you would earn a total of  43.00  from holding Vita Coco or generate 1.2% return on investment over 90 days.

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

Kinetik Holdings  vs.  Vita Coco

Kinetik Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 15 (%) 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.

Vita Coco

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetik Holdings and Vita Coco

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

The idea behind Kinetik Holdings and Vita Coco 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.