Correlation Between Avanceon and K Electric
Can any of the company-specific risk be diversified away by investing in both Avanceon and K Electric 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 Avanceon and K Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanceon and K Electric, you can compare the effects of market volatilities on Avanceon and K Electric 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 Avanceon with a short position of K Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanceon and K Electric.
Diversification Opportunities for Avanceon and K Electric
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Avanceon and KEL is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Avanceon and K Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Electric and Avanceon 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 Avanceon are associated (or correlated) with K Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Electric has no effect on the direction of Avanceon i.e., Avanceon and K Electric go up and down completely randomly.
Pair Corralation between Avanceon and K Electric
Assuming the 90 days trading horizon Avanceon is expected to generate 3.93 times less return on investment than K Electric. But when comparing it to its historical volatility, Avanceon is 1.58 times less risky than K Electric. It trades about 0.11 of its potential returns per unit of risk. K Electric is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 444.00 in K Electric on September 1, 2024 and sell it today you would earn a total of 114.00 from holding K Electric or generate 25.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Avanceon vs. K Electric
Performance |
| Timeline |
| Avanceon |
| K Electric |
Avanceon and K Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanceon and K Electric
The main advantage of trading using opposite Avanceon and K Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanceon position performs unexpectedly, K Electric 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 K Electric will offset losses from the drop in K Electric's long position.| Avanceon vs. Masood Textile Mills | Avanceon vs. Fauji Foods | Avanceon vs. KSB Pumps | Avanceon vs. Mari Petroleum |
| K Electric vs. Agha Steel Industries | K Electric vs. Aisha Steel Mills | K Electric vs. Pakistan Synthetics | K Electric vs. Sitara Chemical Industries |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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