Correlation Between PAY and KICK

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Can any of the company-specific risk be diversified away by investing in both PAY and KICK 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 PAY and KICK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PAY and KICK, you can compare the effects of market volatilities on PAY and KICK 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 PAY with a short position of KICK. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAY and KICK.

Diversification Opportunities for PAY and KICK

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between PAY and KICK is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PAY and KICK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KICK and PAY 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 PAY are associated (or correlated) with KICK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KICK has no effect on the direction of PAY i.e., PAY and KICK go up and down completely randomly.

Pair Corralation between PAY and KICK

If you would invest  0.96  in PAY on December 29, 2023 and sell it today you would earn a total of  0.04  from holding PAY or generate 3.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

PAY  vs.  KICK

 Performance 
       Timeline  
PAY 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in PAY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, PAY exhibited solid returns over the last few months and may actually be approaching a breakup point.
KICK 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days KICK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, KICK is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PAY and KICK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PAY and KICK

The main advantage of trading using opposite PAY and KICK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAY position performs unexpectedly, KICK 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 KICK will offset losses from the drop in KICK's long position.
The idea behind PAY and KICK 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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