Correlation Between KYUSHU EL and SSE PLC
Can any of the company-specific risk be diversified away by investing in both KYUSHU EL and SSE PLC 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 KYUSHU EL and SSE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KYUSHU EL PWR and SSE PLC ADR, you can compare the effects of market volatilities on KYUSHU EL and SSE PLC 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 KYUSHU EL with a short position of SSE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of KYUSHU EL and SSE PLC.
Diversification Opportunities for KYUSHU EL and SSE PLC
Poor diversification
The 3 months correlation between KYUSHU and SSE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KYUSHU EL PWR and SSE PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSE PLC ADR and KYUSHU EL 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 KYUSHU EL PWR are associated (or correlated) with SSE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSE PLC ADR has no effect on the direction of KYUSHU EL i.e., KYUSHU EL and SSE PLC go up and down completely randomly.
Pair Corralation between KYUSHU EL and SSE PLC
Assuming the 90 days horizon KYUSHU EL PWR is expected to generate 1.55 times more return on investment than SSE PLC. However, KYUSHU EL is 1.55 times more volatile than SSE PLC ADR. It trades about 0.06 of its potential returns per unit of risk. SSE PLC ADR is currently generating about 0.03 per unit of risk. If you would invest 505.00 in KYUSHU EL PWR on September 13, 2024 and sell it today you would earn a total of 370.00 from holding KYUSHU EL PWR or generate 73.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KYUSHU EL PWR vs. SSE PLC ADR
Performance |
| Timeline |
| KYUSHU EL PWR |
| SSE PLC ADR |
KYUSHU EL and SSE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KYUSHU EL and SSE PLC
The main advantage of trading using opposite KYUSHU EL and SSE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KYUSHU EL position performs unexpectedly, SSE PLC 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 SSE PLC will offset losses from the drop in SSE PLC's long position.| KYUSHU EL vs. JSC Halyk bank | KYUSHU EL vs. QBE Insurance Group | KYUSHU EL vs. VIRG NATL BANKSH | KYUSHU EL vs. MBANK |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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