Correlation Between Kinetics Market and Caldwell Orkin

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

By analyzing existing cross correlation between Kinetics Market Opportunities and Caldwell Orkin Market, you can compare the effects of market volatilities on Kinetics Market and Caldwell Orkin 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 Kinetics Market with a short position of Caldwell Orkin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Market and Caldwell Orkin.

Diversification Opportunities for Kinetics Market and Caldwell Orkin

0.86

Correlation Coefficient

Kinetics Market  Caldwell Orkin

Very poor diversification

The 3 months correlation between Kinetics and Caldwell is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Caldwell Orkin Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Orkin Market and Kinetics Market 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 Kinetics Market Opportunities are associated (or correlated) with Caldwell Orkin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Orkin Market has no effect on the direction of Kinetics Market i.e., Kinetics Market and Caldwell Orkin go up and down completely randomly.

Pair Corralation between Kinetics Market and Caldwell Orkin

Assuming the 90 days horizon Kinetics Market is expected to generate 1.05 times less return on investment than Caldwell Orkin. In addition to that, Kinetics Market is 1.77 times more volatile than Caldwell Orkin Market. It trades about 0.08 of its total potential returns per unit of risk. Caldwell Orkin Market is currently generating about 0.14 per unit of volatility. If you would invest  2,821  in Caldwell Orkin Market on September 14, 2024 and sell it today you would earn a total of  2,386  from holding Caldwell Orkin Market or generate 84.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Kinetics Market Opportunities  vs.  Caldwell Orkin Market

Kinetics Market Oppo

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Market showed solid returns over the last few months and may actually be approaching a breakup point.

Caldwell Orkin Market

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caldwell Orkin Market are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Caldwell Orkin showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetics Market and Caldwell Orkin

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

The idea behind Kinetics Market Opportunities and Caldwell Orkin Market 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.