Correlation Between Sea and Kite Realty

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

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

Diversification Opportunities for Sea and Kite Realty

0.58

Correlation Coefficient

Sea  Kite Realty

Very weak diversification

The 3 months correlation between Sea and Kite is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group and Sea 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 Sea are associated (or correlated) with Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Sea i.e., Sea and Kite Realty go up and down completely randomly.

Pair Corralation between Sea and Kite Realty

Allowing for the 90-day total investment horizon Sea is expected to generate 2.35 times more return on investment than Kite Realty. However, Sea is 2.35 times more volatile than Kite Realty Group. It trades about 0.27 of its potential returns per unit of risk. Kite Realty Group is currently generating about 0.01 per unit of risk. If you would invest  7,912  in Sea on September 12, 2024 and sell it today you would earn a total of  3,754  from holding Sea or generate 47.45% return on investment over 90 days.

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

Sea  vs.  Kite Realty Group

Sea

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kite Realty Group

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Sea and Kite Realty

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

The idea behind Sea and Kite Realty Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.