Correlation Between Kinetik Holdings and Evotec SE

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

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

Diversification Opportunities for Kinetik Holdings and Evotec SE

-0.7

Correlation Coefficient

Kinetik Holdings  Evotec SE

Excellent diversification

The 3 months correlation between Kinetik and Evotec is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Evotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE 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 Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Evotec SE go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Evotec SE

Given the investment horizon of 90 days Kinetik Holdings is expected to generate 0.61 times more return on investment than Evotec SE. However, Kinetik Holdings is 1.63 times less risky than Evotec SE. It trades about 0.04 of its potential returns per unit of risk. Evotec SE is currently generating about -0.04 per unit of risk. If you would invest  3,038  in Kinetik Holdings on March 7, 2024 and sell it today you would earn a total of  947.00  from holding Kinetik Holdings or generate 31.17% return on investment over 90 days.

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

Kinetik Holdings  vs.  Evotec SE

Kinetik Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Evotec SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evotec SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Kinetik Holdings and Evotec SE

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

The idea behind Kinetik Holdings and Evotec SE 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.