Correlation Between Kinetik Holdings and China Galaxy

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

By analyzing existing cross correlation between Kinetik Holdings and China Galaxy Securities, you can compare the effects of market volatilities on Kinetik Holdings and China Galaxy 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 China Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and China Galaxy.

Diversification Opportunities for Kinetik Holdings and China Galaxy

-0.76

Correlation Coefficient

Kinetik Holdings  China Galaxy

Pay attention - limited upside

The 3 months correlation between Kinetik and China is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and China Galaxy Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Galaxy Securities 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 China Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Galaxy Securities has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and China Galaxy go up and down completely randomly.

Pair Corralation between Kinetik Holdings and China Galaxy

Given the investment horizon of 90 days Kinetik Holdings is expected to generate 1.45 times more return on investment than China Galaxy. However, Kinetik Holdings is 1.45 times more volatile than China Galaxy Securities. It trades about 0.26 of its potential returns per unit of risk. China Galaxy Securities is currently generating about -0.08 per unit of risk. If you would invest  3,186  in Kinetik Holdings on February 15, 2024 and sell it today you would earn a total of  853.00  from holding Kinetik Holdings or generate 26.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Kinetik Holdings  vs.  China Galaxy Securities

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.

China Galaxy Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Galaxy Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, China Galaxy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kinetik Holdings and China Galaxy

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

The idea behind Kinetik Holdings and China Galaxy Securities 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 CEOs Directory module to screen CEOs from public companies around the world.