Correlation Between Keyang Electric and ECSTELECOM
Can any of the company-specific risk be diversified away by investing in both Keyang Electric and ECSTELECOM 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 Keyang Electric and ECSTELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyang Electric Machinery and ECSTELECOM Co, you can compare the effects of market volatilities on Keyang Electric and ECSTELECOM 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 Keyang Electric with a short position of ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and ECSTELECOM.
Diversification Opportunities for Keyang Electric and ECSTELECOM
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Keyang and ECSTELECOM is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM and Keyang Electric 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 Keyang Electric Machinery are associated (or correlated) with ECSTELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECSTELECOM has no effect on the direction of Keyang Electric i.e., Keyang Electric and ECSTELECOM go up and down completely randomly.
Pair Corralation between Keyang Electric and ECSTELECOM
Assuming the 90 days trading horizon Keyang Electric Machinery is expected to generate 1.87 times more return on investment than ECSTELECOM. However, Keyang Electric is 1.87 times more volatile than ECSTELECOM Co. It trades about 0.04 of its potential returns per unit of risk. ECSTELECOM Co is currently generating about 0.07 per unit of risk. If you would invest 369,000 in Keyang Electric Machinery on October 30, 2024 and sell it today you would earn a total of 10,500 from holding Keyang Electric Machinery or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyang Electric Machinery vs. ECSTELECOM Co
Performance |
| Timeline |
| Keyang Electric Machinery |
| ECSTELECOM |
Keyang Electric and ECSTELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyang Electric and ECSTELECOM
The main advantage of trading using opposite Keyang Electric and ECSTELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyang Electric position performs unexpectedly, ECSTELECOM 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 ECSTELECOM will offset losses from the drop in ECSTELECOM's long position.| Keyang Electric vs. Iljin Display | Keyang Electric vs. Seohee Construction Co | Keyang Electric vs. Daesung Hi Tech Co | Keyang Electric vs. Sungdo Engineering Construction |
| ECSTELECOM vs. Daol Investment Securities | ECSTELECOM vs. Hyunwoo Industrial Co | ECSTELECOM vs. LG Household Healthcare | ECSTELECOM vs. Korea Industrial Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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