Correlation Between Tsakos Energy and Kinetik Holdings

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

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

Diversification Opportunities for Tsakos Energy and Kinetik Holdings

-0.8

Correlation Coefficient

Tsakos Energy  Kinetik Holdings

Pay attention - limited upside

The 3 months correlation between Tsakos and Kinetik is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tsakos Energy Navigation and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Tsakos Energy 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 Tsakos Energy Navigation are associated (or correlated) with Kinetik Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetik Holdings has no effect on the direction of Tsakos Energy i.e., Tsakos Energy and Kinetik Holdings go up and down completely randomly.

Pair Corralation between Tsakos Energy and Kinetik Holdings

Considering the 90-day investment horizon Tsakos Energy Navigation is expected to under-perform the Kinetik Holdings. In addition to that, Tsakos Energy is 1.1 times more volatile than Kinetik Holdings. It trades about -0.17 of its total potential returns per unit of risk. Kinetik Holdings is currently generating about 0.27 per unit of volatility. If you would invest  4,273  in Kinetik Holdings on August 31, 2024 and sell it today you would earn a total of  1,593  from holding Kinetik Holdings or generate 37.28% return on investment over 90 days.

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

Tsakos Energy Navigation  vs.  Kinetik Holdings

Tsakos Energy Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsakos Energy Navigation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kinetik Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 20 (%) 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.

Pair Trading with Tsakos Energy and Kinetik Holdings

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

The idea behind Tsakos Energy Navigation and Kinetik 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.