Correlation Between K2 Asset and Objective Corp
Can any of the company-specific risk be diversified away by investing in both K2 Asset and Objective Corp 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 Objective Corp 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 Objective Corp, you can compare the effects of market volatilities on K2 Asset and Objective Corp 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 Objective Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Objective Corp.
Diversification Opportunities for K2 Asset and Objective Corp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KAM and Objective is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and Objective Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Objective Corp 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 Objective Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Objective Corp has no effect on the direction of K2 Asset i.e., K2 Asset and Objective Corp go up and down completely randomly.
Pair Corralation between K2 Asset and Objective Corp
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 1.89 times more return on investment than Objective Corp. However, K2 Asset is 1.89 times more volatile than Objective Corp. It trades about 0.17 of its potential returns per unit of risk. Objective Corp is currently generating about 0.24 per unit of risk. If you would invest 5.00 in K2 Asset Management on September 3, 2024 and sell it today you would earn a total of 2.00 from holding K2 Asset Management or generate 40.0% 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. Objective Corp
Performance |
| Timeline |
| K2 Asset Management |
| Objective Corp |
K2 Asset and Objective Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and Objective Corp
The main advantage of trading using opposite K2 Asset and Objective Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, Objective Corp 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 Objective Corp will offset losses from the drop in Objective Corp's long position.The idea behind K2 Asset Management and Objective Corp 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.| Objective Corp vs. Retail Food Group | Objective Corp vs. K2 Asset Management | Objective Corp vs. Diversified United Investment | Objective Corp vs. Mach7 Technologies |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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