Correlation Between CSL and KKR Credit

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

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

Diversification Opportunities for CSL and KKR Credit

0.21

Correlation Coefficient

CSL  KKR Credit

Modest diversification

The 3 months correlation between CSL and KKR is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CSL and KKR Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Credit Income and CSL 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 CSL are associated (or correlated) with KKR Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Credit Income has no effect on the direction of CSL i.e., CSL and KKR Credit go up and down completely randomly.

Pair Corralation between CSL and KKR Credit

Assuming the 90 days trading horizon CSL is expected to generate 1.51 times more return on investment than KKR Credit. However, CSL is 1.51 times more volatile than KKR Credit Income. It trades about 0.11 of its potential returns per unit of risk. KKR Credit Income is currently generating about 0.15 per unit of risk. If you would invest  24,189  in CSL on April 24, 2025 and sell it today you would earn a total of  2,206  from holding CSL or generate 9.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

CSL  vs.  KKR Credit Income

CSL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, CSL may actually be approaching a critical reversion point that can send shares even higher in August 2025.

KKR Credit Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Credit Income are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, KKR Credit may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CSL and KKR Credit

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

The idea behind CSL and KKR Credit Income 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.