Correlation Between KKR Co and First BITCoin

Can any of the company-specific risk be diversified away by investing in both KKR Co and First BITCoin 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 First BITCoin 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 First BITCoin Capital, you can compare the effects of market volatilities on KKR Co and First BITCoin 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 First BITCoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and First BITCoin.

Diversification Opportunities for KKR Co and First BITCoin

-0.06

Correlation Coefficient

KKR Co  First BITCoin

Good diversification

The 3 months correlation between KKR and First is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and First BITCoin Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First BITCoin Capital 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 First BITCoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First BITCoin Capital has no effect on the direction of KKR Co i.e., KKR Co and First BITCoin go up and down completely randomly.

Pair Corralation between KKR Co and First BITCoin

Considering the 90-day investment horizon KKR Co LP is expected to generate 0.12 times more return on investment than First BITCoin. However, KKR Co LP is 8.16 times less risky than First BITCoin. It trades about -0.15 of its potential returns per unit of risk. First BITCoin Capital is currently generating about -0.15 per unit of risk. If you would invest  10,093  in KKR Co LP on February 5, 2024 and sell it today you would lose (592.00) from holding KKR Co LP or give up 5.87% of portfolio value over 90 days.

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

KKR Co LP  vs.  First BITCoin Capital

KKR Co LP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 5 (%) 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 June 2024.

First BITCoin Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First BITCoin Capital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, First BITCoin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KKR Co and First BITCoin

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

The idea behind KKR Co LP and First BITCoin Capital 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.