Correlation Between Obayashi and KKR Co
Can any of the company-specific risk be diversified away by investing in both Obayashi and KKR Co 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 Obayashi and KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Obayashi and KKR Co LP, you can compare the effects of market volatilities on Obayashi and KKR Co 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 Obayashi with a short position of KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Obayashi and KKR Co.
Diversification Opportunities for Obayashi and KKR Co
Poor diversification
The 3 months correlation between Obayashi and KKR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Obayashi and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP and Obayashi 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 Obayashi are associated (or correlated) with KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Obayashi i.e., Obayashi and KKR Co go up and down completely randomly.
Pair Corralation between Obayashi and KKR Co
Assuming the 90 days horizon Obayashi is expected to generate 1.94 times less return on investment than KKR Co. But when comparing it to its historical volatility, Obayashi is 1.22 times less risky than KKR Co. It trades about 0.08 of its potential returns per unit of risk. KKR Co LP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,587 in KKR Co LP on September 24, 2024 and sell it today you would earn a total of 10,171 from holding KKR Co LP or generate 221.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Obayashi vs. KKR Co LP
Performance |
Timeline |
Obayashi |
KKR Co LP |
Obayashi and KKR Co Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Obayashi and KKR Co
The main advantage of trading using opposite Obayashi and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Obayashi position performs unexpectedly, KKR Co 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 KKR Co will offset losses from the drop in KKR Co's long position.Obayashi vs. Watsco Inc | Obayashi vs. Fastenal Company | Obayashi vs. SiteOne Landscape Supply | Obayashi vs. Ferguson Plc |
KKR Co vs. Carlyle Group | KKR Co vs. Ares Management LP | KKR Co vs. Blackstone Group | KKR Co vs. Blue Owl Capital |
Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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