Correlation Between P10 and FS KKR

Can any of the company-specific risk be diversified away by investing in both P10 and FS KKR 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 P10 and FS KKR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between P10 Inc and FS KKR Capital, you can compare the effects of market volatilities on P10 and FS KKR 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 P10 with a short position of FS KKR. Check out your portfolio center. Please also check ongoing floating volatility patterns of P10 and FS KKR.

Diversification Opportunities for P10 and FS KKR

0.9

Correlation Coefficient

P10  FS KKR

Almost no diversification

The 3 months correlation between P10 and FSK is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding P10 Inc and FS KKR Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS KKR Capital and P10 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 P10 Inc are associated (or correlated) with FS KKR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS KKR Capital has no effect on the direction of P10 i.e., P10 and FS KKR go up and down completely randomly.

Pair Corralation between P10 and FS KKR

Allowing for the 90-day total investment horizon P10 Inc is expected to under-perform the FS KKR. In addition to that, P10 is 1.53 times more volatile than FS KKR Capital. It trades about -0.01 of its total potential returns per unit of risk. FS KKR Capital is currently generating about 0.03 per unit of volatility. If you would invest  2,004  in FS KKR Capital on August 4, 2024 and sell it today you would earn a total of  10.00  from holding FS KKR Capital or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

P10 Inc  vs.  FS KKR Capital

P10 Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in P10 Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, P10 showed solid returns over the last few months and may actually be approaching a breakup point.

FS KKR Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, FS KKR may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with P10 and FS KKR

The main advantage of trading using opposite P10 and FS KKR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P10 position performs unexpectedly, FS KKR 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 FS KKR will offset losses from the drop in FS KKR's long position.

The idea behind P10 Inc and FS KKR Capital 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.