Correlation Between KKR Real and Catalyst Pharmaceuticals

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

By analyzing existing cross correlation between KKR Real Estate and Catalyst Pharmaceuticals, you can compare the effects of market volatilities on KKR Real and Catalyst Pharmaceuticals 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 Real with a short position of Catalyst Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Real and Catalyst Pharmaceuticals.

Diversification Opportunities for KKR Real and Catalyst Pharmaceuticals

-0.06

Correlation Coefficient

KKR Real  Catalyst Pharmaceuticals

Good diversification

The 3 months correlation between KKR and Catalyst is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding KKR Real Estate and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals and KKR Real 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 Real Estate are associated (or correlated) with Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of KKR Real i.e., KKR Real and Catalyst Pharmaceuticals go up and down completely randomly.

Pair Corralation between KKR Real and Catalyst Pharmaceuticals

Given the investment horizon of 90 days KKR Real Estate is expected to generate 0.88 times more return on investment than Catalyst Pharmaceuticals. However, KKR Real Estate is 1.14 times less risky than Catalyst Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest  866.00  in KKR Real Estate on April 20, 2025 and sell it today you would earn a total of  22.00  from holding KKR Real Estate or generate 2.54% return on investment over 90 days.

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

KKR Real Estate  vs.  Catalyst Pharmaceuticals

KKR Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, KKR Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Catalyst Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalyst Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Catalyst Pharmaceuticals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KKR Real and Catalyst Pharmaceuticals

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

The idea behind KKR Real Estate and Catalyst Pharmaceuticals 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.