Correlation Between KKR Co and Great Ajax

Can any of the company-specific risk be diversified away by investing in both KKR Co and Great Ajax 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 KKR Co and Great Ajax into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KKR Co LP and Great Ajax Corp, you can compare the effects of market volatilities on KKR Co and Great Ajax 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 KKR Co with a short position of Great Ajax. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and Great Ajax.

Diversification Opportunities for KKR Co and Great Ajax

-0.78

Correlation Coefficient

KKR Co  Great Ajax

Pay attention - limited upside

The 3 months correlation between KKR and Great is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Great Ajax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Ajax Corp and KKR Co 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 KKR Co LP are associated (or correlated) with Great Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Ajax Corp has no effect on the direction of KKR Co i.e., KKR Co and Great Ajax go up and down completely randomly.

Pair Corralation between KKR Co and Great Ajax

Considering the 90-day investment horizon KKR Co LP is expected to under-perform the Great Ajax. But the stock apears to be less risky and, when comparing its historical volatility, KKR Co LP is 1.64 times less risky than Great Ajax. The stock trades about -0.11 of its potential returns per unit of risk. The Great Ajax Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  362.00  in Great Ajax Corp on January 26, 2024 and sell it today you would lose (8.00) from holding Great Ajax Corp or give up 2.21% of portfolio value over 90 days.

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

KKR Co LP  vs.  Great Ajax Corp

KKR Co LP

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, KKR Co may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Great Ajax Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Ajax Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KKR Co and Great Ajax

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

The idea behind KKR Co LP and Great Ajax 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.