Correlation Between K2 Asset and ALS
Can any of the company-specific risk be diversified away by investing in both K2 Asset and ALS 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 K2 Asset and ALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Asset Management and ALS, you can compare the effects of market volatilities on K2 Asset and ALS 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 K2 Asset with a short position of ALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and ALS.
Diversification Opportunities for K2 Asset and ALS
Poor diversification
The 3 months correlation between KAM and ALS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and ALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALS and K2 Asset 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 K2 Asset Management are associated (or correlated) with ALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALS has no effect on the direction of K2 Asset i.e., K2 Asset and ALS go up and down completely randomly.
Pair Corralation between K2 Asset and ALS
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 4.16 times more return on investment than ALS. However, K2 Asset is 4.16 times more volatile than ALS. It trades about 0.08 of its potential returns per unit of risk. ALS is currently generating about 0.07 per unit of risk. If you would invest 4.70 in K2 Asset Management on September 3, 2024 and sell it today you would earn a total of 2.30 from holding K2 Asset Management or generate 48.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. ALS
Performance |
| Timeline |
| K2 Asset Management |
| ALS |
K2 Asset and ALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and ALS
The main advantage of trading using opposite K2 Asset and ALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, ALS 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 ALS will offset losses from the drop in ALS's long position.The idea behind K2 Asset Management and ALS 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.| ALS vs. Microequities Asset Management | ALS vs. Regal Funds Management | ALS vs. K2 Asset Management | ALS vs. My Foodie Box |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |